^ 


DEPARTMENT  OF  COMMERCE  AND  LABOR 

BUREAU  OF  MANUFACTURES 
JOHN  M.  CARSON,  Chief 


REPORT  ON 

TRADE  CONDITIONS  IN 

ECUADOR 


By 

CHARLES  M.  PEPPER 

Special  Agent  of  the  Department  of  Commerce  and  Labor 


TRANSMITTED  TO  CONGRESS  IN  COMPLIANCE  WITH 
THE  ACT  OF  FEBRUARY  26,  1907,  AUTHORIZING 
INVESTIGATIONS  OF  TRADE   CONDITIONS  ABROAD 


REPRINTED  AND  DISTRIBUTED 

BY 

THE  INTERNATIONAL  BUREAU  OF 

AMERICAN  REPUBLICS 

JOHN  BARRETT,  Director 

No,  2  JACKSON  PLACE  WASHINGTON,  D.  C. 


Reprinted 

WASHINGTON 
GOVERNMENT  PRINTING  OFFICE 

19  0  9 


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Cj  QCj   Q^ 


DEPARTMENT  OF  COMMERCE  AND    LABOR 
BUREAU  OF  MANUFACTURES 

JOHN    M.  CARSON,  Chief 


REPORT  ON 

TRADE  CONDITIONS  IN 

ECUADOR 


By 

CHARLES  M.  PEPPER 

Special  Agent  of  the  Department  of  Commerce  and  Labor 


TRANSMITTED  TO  CONGRESS  IN  COMPLIANCE  WITH 
THE  ACT  OF  FEBRUARY  26,  1907,  AUTHORIZING 
INVESTIGATIONS    OF    TRADE   CONDITIONS   ABROAD 


WASHINGTON* 
GOVERNMENT   PRINTING  OFFICE 
1908 


CONTENTS. 


Page. 

Letter  of  submittal 5 

Accessibility  and  resources 7 

Area  and  population 7 

Leading  cities 8 

Towns  and  hamlets — Rural  residents 8 

Trade  analysis 9 

The  commercial  metropolis 9 

Soil  productions 10 

Cocoa  statistics 10 

Limited  planting  of  cacao 11 

High  value  of  vegetable  ivory 12 

Active  rubber  gathering 12 

Coffee  and  cane  growing 13 

Tobacco,  cotton,  and  fruits 14 

Grain  and  stock  raising 15 

Available  forestry  products 15 

Mines  and  minerals 16 

Coal  and  petroleum  deposits 16 

National  industries 17 

Various  small  factories 18 

Railway  systems 18 

Opposition  and  benefits L 19 

Extensions  and  projects 19 

Public  improvements 20 

Sanitation  plans  and  waterworks 21 

Foreign  commerce 22 

Share  of  leading  competing  nations 23 

America  the  best  customer. * 24 

Needed  improvements 24 

American  mills  could  not  accept  all  orders 25 

General  development 25 

Introduction  of  modern  mechanisms 26 

Leading  mercantile  imports 26 

Hardware,  sewing  machines,  and  motors 27 

American  textile  trade  loss 28 

Leather  goods  and  foodstuffs 29 

Beverages,  oils,  and  drugs 29 

Furniture  opportunity 30 

Shipping  situation 30 

Tonnage  movements 31 

Inadequate  steamship  facilities  from  Panama 32 

Delay  of  passengers 33 

3 


4  CONTENTS. 

Page. 

National  riscal  system 33 

The  public  debt 34 

Maintenance  of  gold  standard 35 

Banks  of  issue 35 

Discounts  and  exchange 36 

Merchants  and  trade  methods 37 

American  representation 37 

National  exposition — Chambers  of  Commerce 38 

Conclusion v 38 


LETTER  OF  SUBMITTAL. 


Guayaquil,  Ecuador,  January  15,  1908. 

Sir:  In  submitting  the  appended  Report  on  Trade  Conditions  in 
Ecuador  I  wish  to  call  attention  to  the  especially  favorable  pros- 
pects which  exist  for  trade  with  the  United  States. 

Ecuador  throjigh  its  geographical  position  will  be  the  most  di- 
rectly benefited  of  the  west  coast  countries. of  South  America  by 
the  Panama  Canal,  and  the  results  of  that  waterway  in  the  increased 
volume  of  commerce  seeking  this  route  are  already  being  anticipated 
at  Guayaquil.  Fuller  benefits  will  be  secured  when  this  wealthy 
port  with  its  many  natural  advantages  for  shipping  and  its  facil- 
ities for  handling  commodities  of  import  and  export  is  protected 
from  the  ravages  of  tropical  epidemic  diseases  by  placing  it  in  line 
with  modern  scientific  sanitation  as  has  been  done  so  successfully  at 
Habana  and  Panama. 

An  important  means  of  developing  the  internal  resources  of  the 
country  is  the  American  Railway  extending  from  the  coast  across 
the  Andes  to  the  capital.  With  the  means  of  transportation  thus 
facilitated  an  increase  of  commerce  should  follow,  and  some  indica- 
tions of  this  are  now  apparent.  The  full  effects  in  providing  an  out- 
let for  Ecuadorian  products  and  in  enlarging  the  market  for  goods 
from  abroad  ultimately  will  be  shown  in  the  addition  to  the  foreign 
trade.  There  is  now  an  interchange  of  commodities  to  the  approx- 
imate value  of  $22,000,000  annually.  In  the  actual  exchange  the 
balance  is  in  favor  of  Ecuador.  The  country  is  especially  favored  in 
the  tropical  agricultural  exports  which  form  the  bulk  of  its  exports, 
for  most  of  them  are  produced  in  few  other  regions  and  in  the  face 
of  lowered  values  of  such  staple  tropical  products  as  coffee  are  able 
to  command  higher  prices.  This  is  in  particular  true  of  cocoa,  or 
chocolate,  which  provides  more  than  one-half  the  total  exports. 

The  products  imported  comprise  textiles,  foodstuffs,  railway  ma- 
terial, electrical  and  other  machinery  in  small  quantities  as  yet,  and 
a  large  variety  of  miscellaneous  manufactured  articles.  The  United 
States  supplies  its  full  share  of  all  the  imports  except  in  textiles. 
The  cotton  piece-goods  trade,  once  almost  entirely  in  American 
hands,  has  passed  to  Manchester. 

Financial   stability  is  so  important  an  element  in  international 
trade  that  I  have  described  briefly  Ecuador's  monetary  system,  which 
is  maintained  on  the  gold  standard  and  facilitates  commercial  ex- 
change by  the  safeguard  it  affords  against  violent  fluctuations. 
Respectfully, 

Charles  M.  Pepper, 
Special  Agent  of  the  Department  of  Commerce  and  Labor. 

To  Hon.  Oscar  S.  Straus, 

Secretary  of  Commerce  and  Labor. 

5 


TRADE  CONDITIONS  IN  ECUADOR. 


ACCESSIBILITY  AND  RESOURCES. 

Ecuador  in  its  geographical  relation  occupies  an  advantageous 
position  among  the  west  coast  countries  of  South  America.  Accessi- 
ble by  Panama  and  by  the  Straits  of  Magellan,  its  value  as  a  future 
market  for  foreign  products  does  not  depend  so  much  on  ocean 
transportation  facilities  as  on  the  addition  to  its  purchasing  power 
through  the  increase  in  its  natural  resources  such  as  cocoa,  and  by 
the  improvement  in  the  means  of  communication  which  will  draw 
isolated  districts  together  and  enable  them  to  get  their  products  to 
the  coast  and  receive  imported  goods  in  exchange.  That  the  trade 
has  not  advanced  more  rapidly  is  due  to  the  slowness  with  which  the 
obstacles  to  internal  development  have  been  overcome  and  also  to  the 
failure  to  take  advantage  of  favorable  natural  conditions. 

Though  on  their  face  the  statistics  do  not  show  it,  the  total  foreign 
commerce  of  Ecuador  for  the  last  five  years  has  ranged  approxi- 
mately from  $18,000,000  to  $22,000,000,  the  merchandise  exports  ex- 
ceeding the  imports  by  from  $2,000,000  to  $2,500,000  annually,  with 
no  heavy  charges  to  pay  abroad,  the  chief  one  being  interest  on  some 
$12,000,000  of  railway  bonds  funded  into  a  national  debt.  This  and 
other  remittances,  such  as  to  large  landowners  living  in  Europe  and 
drawing  their  incomes  from  estates  in  Ecuador  probably  establish 
an  actual  equilibrium.  The  exportation  and  importation  per  capita 
is  difficult  to  fix  with  exactness  because  of  the  uncertainty  as  to  the 
number  of  inhabitants. 

AREA  AND  POPULATION. 

The  area  of  Ecuador  is  usually  placed  at  116,000  to  119,000  square 
miles  and  the  population  estimated  at  from  1,300,000  to  1,500,000. 
The  settlement  of  boundary  disputes  with  neighboring  countries 
would  not  reduce  the  area  materially.  The  number  of  inhabitants  is 
more  difficult  to  arrive  at.  A  partial  census  was  taken  by  the  Gov- 
ernment in  1900  and  since  then  the  official  estimate  has  been  1,500,000, 
though  the  full  returns  have  not  been  published  and  some  Govern- 
ment publications  continue  to  make  estimates  of  taxation  and  debt 
on  the  assumption  of  only  1,300,000  inhabitants.  This  also  has  been 
the  basis  of  calculations  of  the  foreign  consuls  in  Ecuador.    The  most 

7 


8  TRADE    CONDITIONS    IN    ECUADOR. 

detailed  was  that  of  the  British  consul  at  Quito  in  1892,  who  took 
the  countries  by  districts. 

LEADING    CITIES.  , 

Wide  variations  appear  in  such  figures  as  are  obtainable.  Quito, 
the  capital,  is  usually  credited  with  a  population  of  80,000  and  in 
Spanish  colonial  times  it  did  have  that  number.  But  the  Govern- 
ment census  taken  as  recently  as  1906  enumerated  only  51,000. 
Allowing  10  per  cent  of  the  inhabitants  to  have  escaped  enumera- 
tion, which  is  entirely  probable  from  various  causes,  the  population 
of  the  capital  at  the  present  period  would  be  about  56,000.  Guaya- 
quil, on  the  other  hand,  shows  an  increase.  In  1890  the  population 
was  45,000  and  the  census  of  1899  gave  60,000.  Though  the  float- 
ing population  at  all  times  is  large,  there  has  been  an  increase  in 
the  permanent  residents,  as  is  shown  by  the  large  number  of  new 
dwellings  that  have  been  erected,  and  Guayaquil  at  the  beginning 
of  1908  may  be  said  to  have  from  70,000  to  75,000  inhabitants. 

TOWNS    AND    HAMLETS — RURAL    RESIDENTS. 

After  Guayaquil  and  Quito  the  largest  town  in  the  Republic  is 
Cuenca,  the  trade  center  of  the  south,  whose  population  is  between 
35,000  and  40,000.  Loja,  near  the  Peruvian  border,  comes  next,  and 
in  the  north  Ibarra  is  the  largest  city.  Its  population,  however, 
does  not  reach  10,000. 

The  small  number  of  towns  which  have  more  than  5,000  inhabi- 
tants is  usually  the  basis  for  the  minimum  estimate  of  a  total  popu- 
lation not  exceeding  1,300,000  for  the  whole  country,  but  this  is 
misleading.  The  cereal-raising  regions  of  the  Andean  plateaus 
and  valleys  are  well  settled  and  the  number  of  Indian  hamlets,  each 
of  which  groups  several  hundred  persons  together,  is  large.  A 
practical  means  of  judging  the  number  of  inhabitants  in  the  interior 
districts  has  been  afforded  during  the  construction  of  the  Guayaquil 
and  Quito  railway.  In  seeking  laborers  invariably  many  more 
would  be  found  than  the  apparent  number  of  inhabitants  indi- 
cated, 500  men  often  being  obtained  in  districts  where  from  the 
ordinary  indications  not  more  than  200  could  be  expected.  The 
general  manager  of  the  railway,  from  this  experience  and  other 
observations,  estimates  the  total  population  of  Ecuador  at  1,700,000. 
The  difficulties,  in  securing  a  correct  enumeration  of  the  Indians, 
through  their  fear  of  military  conscription,  taxes,  and  unknown 
harm,  are  well  understood.  In  view  of  these  difficuJties  and  of  the 
experience  of  the  railway  management,  the  probability  is  that  the 
population  of  the  farming  districts  and  the  interior  regions  has 
been  underestimated.  For  the  whole  country  it  may  be  considered 
as  1,500,000,  or  about  13  persons  per  square  mile. 


TKADE    CONDITIONS   IN    ECUADOR. 


TRADE    ANALYSIS. 


With  the  foreign  commerce  in  commodities  taken  as  $22,000,000 
this  would  mean  $14.66  per  capita,  of  Avhich  $6  per  capita  is  imports, 
as  will  appear  from  the  figures  to  be  given  later.  This  shows  that 
the  bulk  of  the  inhabitants  consume  little  foreign  goods,  a  condition 
which  might  be  expected  of  a  population  so  primitive  as  the  native 
Indians  who  form  the  bulk  of  it.  But  though  a  primitive  popu- 
lation, the  majority  are  farmers  or  town  laborers,  and  while  they 
have  not  yet  developed  civilized  wants  in  the  degree  to  make  them 
large  buyers  of  foreign  goods,  the  process  has  begun  and  its  con- 
tinuance will  give  importance  to  Ecuador  as  a  market  for  manu- 
factured articles. 

Ecuador  as  such  a  market  may  be  analyzed  in  Guayaquil,  for  the 
trade  centers  here  and  the  city  dominates  the  commerce  of  the  entire 
country.  It  has  the  advantage  of  location  and  this  advantage  has 
been  utilized  to  prevent  the  growth  of  rival  ports  so  effectively  that 
none  of  importance  exists,  though  several  places  have  good  harbor 
facilities.  Situated  on  the  Guayas  River  at  the  head  of  the  Gulf  all 
ocean  vessels  are  able  to  visit  it  and  freight  is  received  not  only  for 
distribution  to  the  interior,  but  also  for  the  coast  towns.  The  steam- 
ship lines  from  Panama  maintain  a  service  which  touches  at  the  land- 
ings on  the  north,  but  the  effect  in  decreasing  the  importance  of 
Guayaquil  by  lessening  the  transshipments  is  insignificant.  Traffic 
is  carried  on  up  the  Daule,  the  Bode,  and  other  tributaries  of  the 
Guayas  by  American  paddle-wheel  river  steamers  of  30  to  60  tons 
capacity,  by  steam  launches  of  15  to  20  tons,  and  by  canoes  of  15  to 
25  tons.  Since  the  building  of  the  railway  some  change  has  been 
made  in  the  routes  of  transportation  to  and  from  the  interior,  but 
none  of  them  have  deviated  from  Guayaquil  as  a  starting  point  or  as 
a  terminus,  and  the  city  continues  both  the  distributing  center  for 
imported  goods  and  for  the  exportation  of  the  products  of  the 
country. 

THE    COMMERCIAL    METROPOLIS. 

The  relation  of  Guayaquil  to  the  commerce  of  Ecuador  appears 
most  clearly  in  the  customs-house  returns  of  exports  and  imports. 
For  the  calendar  year  1906  the  total  exports  as  officially  stated  were 
21,965,000  sucres,  or  nearly  $11,000,000,  and  the  imports  17,012,000 
sucres  or  $8,500,000.  (The  value  of  the  sucre  is  48.7  cents,  but  in 
reducing  in  round  numbers  to  dollars  2  sucres  may  be  taken  as  equal 
to  $1.)  Of  the  21,965,000  sucres  at  which  the  exports  were  valued 
17,267.000  were  through  Guayaquil,  and  of  the  17,012,000  sucres  of 
imports  15,768,000  were  also  through  that  port.  Of  the  customs 
duties  collected  on  imports  and  exports  Guayaquil  received  6,989,000 
in  a  total  of  8,269,000  sucres.  In  previous  years  the  proportions  were 
about  the  same. 

-09 2 


10 


TRADE    CONDITIONS    IN    ECUADOR. 


The  substantial  monopoly  of  trade  which  Guayaquil  has  held  un- 
interruptedly for  many  years  has  made  it  the  wealthiest  port  on  the 
Pacific  in  proportion  to  size  and  one  of  the  richest  cities  of  the  world 
in  proportion  to  its  population.  A  large  amount  of  capital  has  been 
accumulated,  the  commercial  community  is  a  concentrated  one,  the 
business  being  in  the  hands  of  a  comparatively  few  strong  firms  and 
individuals,  and  there,  is  usually  a  surplus  of  home  capital  to  engage 
in  enterprises  which  may  prove  attractive.  Yet  it  is  doubtful 
whether  this  accumulated  capital  is  performing  the  service  which 
might  reasonably  be  expected  of  it.  This  will  appear  from  a  review 
of  the  productive  resources  of  Ecuador  on  which  its  purchasing  power 
depends. 

SOIL  PRODUCTIONS. 

The  products  are  so  largely  those  of  tropical  agriculture  that 
when  these  are  described  there  is  little  left  to  mention.  They  include 
cocoa,  rubber,  coffee,  hides,  vegetable  ivory,  and  fruits.  There  are 
also  some  fibers,  the  principal  one  of  which  is  the  paja  or  Toquilla 
grass  that  is  made  into  straw  hats.  Notwithstanding  the  equato- 
rial climate  the  cereals  are  grown  in  the  Andean  plateaus  at  heights 
of  8,000  feet  and  upward,  but  they  do  not  suffice  for  the  domestic 
consumption.    This  also  is  true  of  sugar  cane  and  cotton. 

Cocoa,  or  the  chocolate  bean,  has  become  one  of  the  world's  food 
products  for  which  the  constantly  increasing  consumption  has  in- 
sured a  steadily  advancing  price.  It  is  subject  to  none  of  the  vio- 
lent fluctuations  and  drops  in  value  which  have  made  coffee  growing 
so  hazardous  in  most  tropical  countries.  There  is  no  overproduc- 
tion, and  in  view  of  the  increased  consumption  and  the  limited 
regions  in  which  cocoa  can  be  grown  a  good  market  seems  assured 
for  an  indefinite  period. 

COCOA  STATISTICS. 

Ecuador  produces  cocoa  of  superior  quality  which  is  always  in 
demand,  but  its  share  in  the  world's  production  has  fallen  from  more 
than  30  per  cent  in  1899,  when  there  was  a  bumper  crop  which 
brought  $8,000,000,  to  less  than  20  per  cent  in  1907.  The  chief 
change  in  the  world's  crop  has  been  the  gain  in  the  Portuguese 
possessions  of  West  Africa.  The  Ecuador  exports  in  quantities  and 
values  since  1901  have  been  as  follows : 


Year. 

Quantity. 

Value. 

Year. 

Quantity. 

Value. 

1901 

Kilos. 
23,179,095 
24,398,416 
23,005,012 

Sucres. 
.    9,232,100 
9,811,400 
9.546,600 

1904 

Kilos. 
18,584,128 

21,127,833 
23,426,897 

Sucres. 
11,746,828 

1902 

1905 

9,331,278 

1903 

1906 

12,198, 481 

TBADE    CONDITIONS    IN    ECUADOR.  11 

In  1856  the  production  of  cocoa  in  Ecuador  was  about  700,000 
kilos  or  1,540,000  pounds,  and  the  value  $500,000,  so  that  roughly  it 
may  be  said  that  the  increase  in  value  of  the  export  crop  in  fifty  years 
has  been  from  $500,000  to  $6,000,000.  A  poor  crop  in  1907  has  been 
partly  overcome  by  a  further  increase  in  value.  The  first  ten  months 
of  the  year  indicated  a  probable  falling  off  of  20  per  cent  in  the 
quantity  produced,  but  this  was  more  than  offset  by  the  rise  in  value. 
During  1905  the  average  price  of  cocoa  in  Guayaquil,  f.  o.  b.,  was  60 
English  shillings  (shilling  24^  cents)  per  quintal  of  112  pounds;  dur- 
ing 1906,  68  shillings;  and  for  the  first  ten  months  of  1907,  94  shill- 
ings, or  20  cents  per  pound.  Thus  there  has  been  no  loss  to  the 
country  as  a  whole  in  the  amount  received  for  the  total  crop,  though 
many  individual  orchard  owners  have  suffered  and  the  Government 
has  been  deprived  of  considerable  revenue,  as  the  export  and  other 
taxes  are  levied  on  the  basis  of  quantity  instead  of  value.  It  should 
also  be  noted  that  the  customs-house  declarations  are  supposed  to  be 
from  20  to  22  per  cent  below  the  actual  export  value,  so  that  $1,000,- 
000  might  be  added  to  the  statistics  in  seeking  to  arrive  at  the  real 
worth  of  the  Ecuador  cocoa  crop.  From  any  standpoint  this  product 
gives  the  country  $6,000,000  annually  with  which  to  make  purchases 
abroad  and  meet  foreign  obligations.  In  1906  it  supplied  12,198,000 
sucres  out  of  total  exportations  of  21,965,000  sucres,  about  55  per  cent. 

LIMITED  PLx\NTING  OF  CACAO. 

In  view  of  the  value  of  the  product  and  the  stability  of  the  market, 
comment  is  often  made  on  the  failure  of  Ecuador  further  to  develop 
so  valuable  a  resource,  as  there  is  much  land  in  the  rich  delta  region 
which  is  as  well  adapted  to  cacao  orchards  as  that  now  under  culti- 
vation. This  is  the  more  surprising  since  the  causes  of  the  decreased 
production  per  orchard  and  per  tree  are  known  to  be  permanent  and 
these  only  can  be  offset  by  planting  fresh  orchards  and  systematically 
enlarging  the  areas  under  cultivation.  The  increasing  dryness  of  the 
climate  is  an  established  phenomenon;  the  sands  of  northern  Peru 
are  encroaching  on  Ecuador  and  this  region  must  be  irrigated,  while 
fresh  districts  are  planted  in  the  delta  where  the  natural  moisture  in 
ordinary  years  is  still  abundant.  The  estimates  of  the  new  trees 
planted  during  1906  vary  from  500,000  to  1,000,000,  but  this  is  far 
from  enough. 

Absentee  landlordism  is  said  to  be  one  cause  of  the  lack  of  enter- 
prise in  providing  for  new  orchards.  Many  of  the  owners  spend  the 
entire  year  in  Europe,  and  though  their  incomes  may  suffer  a  slight 
diminution  the  increase  in  the  price  of  cocoa  has  kept  most  of  them 
in  comfortable  circumstances  and  without  incentive  to  make  pro- 
vision for  the  future.  Another  cause  of  the  lack  of  new  planting  has 
been  the  length  of  time  required  to  secure  returns  on  capital  outlay, 


12  TRADE    CONDITIONS    IN    ECUADOR. 

the  cacao  tree  not  producing  till  seven  years  old  and  then  requiring 
three  or  four  years  more  to  reach  full  productiveness.  This  is  per- 
haps one  reason,  in  connection  with  the  unfavorable  climate  condi- 
tions, why  foreigners  have  not  gone  more  extensively  into  the  in- 
dustry, but  it  is  not  sufficient  explanation  of  the  failure  of  native 
owners  to  renew  and  extend  orchards  already  producing  in  order  to 
insure  compensation  for  the  loss  of  productivity  in  trees  already 
bearing.  In  a  few  instances  foreign  capital  has  met  the  situation. 
Two  large  estates  have  been  organized  into  companies  with  head- 
quarters in  Hamburg  and  these  are  operated  very  successfully  with 
regard  to  the  future  as  well  as  the  present. 

HIGH    VALUE    OF    VEGETABLE    IVORY. 

After  cocoa  the  most  valuable  export  of  Ecuador  is  the  wild 
product  known  as  tagua  or  vegetable  ivory,  from  which  bone  but- 
tons are  made.  The  value  of  the  crop  ranges  from  $1,250,000  to 
$1,500,000  annually  and,  as  with  cocoa,  Ecuador  is  one  of  the  world's 
chief  sources  of  supply,  the  quantity  produced  being  considerably 
larger  than  in  the  neighboring  country  of  Colombia.  Substan- 
tially all  the  vegetable  ivory  exported  is  gathered  from  the  wild 
palm  tree,  since  it  is  not  valuable  enough  to  encourage  cultivation. 
It  is  collected  by  the  Indians,  who  transport  it  on  their  own  backs 
and  on  the  backs  of  burros  and  pack  mules  from  the  mountainous 
regions  to  the  coast.  If  this  labor  were  not  of  the  cheapest  kind, 
the  product  would  not  be  worth  gathering,  since  it  could  not  sustain 
ordinary  transport  charges. 

Nevertheless,  in  connection  with  other  tropical  products,  tagua  is 
an  important  element  in  the  natural  wealth  of  the  country  and  also 
a  fairly  stable  one.  In  1870  the  exports  were  valued  at  $25,000:  in 
1879,  $285,000;  in  1889,  $250,000;  1899,  $460,000;  and  in  1906,  ex- 
portations  of  21,797,000  kilos  brought  $1,300,000  as  against  $1,000,000 
received  for  19,036,000  kilos  in  the  previous  year.  Unlike  cocoa  the 
price  has  varied  little  from  year  to  year. 

ACTIVE   RUBBEK   GATHERING. 

Caucho,  or  rubber,  is  becoming  increasingly  valuable  to  Ecuador, 
the  quality  of  the  wild  product  obtained  being  good,  while  expecta- 
tions are  entertained  that  artificial  cultivation  will  be  made  com- 
mercially profitable.  The  wild  rubber  is  obtained  in  the  forest 
regions  extending  from  the  slopes  of  the  Eastern  Cordillera  through 
the  rivers  tributary  to  the  Amazon — the  Napo  and  the  Putumayo 
districts,  the  latter  in  the  zone  of  boundaries  in  dispute  with  Peru. 

The  lack  of  means  of  communication  and  of  access  to  the  region, 
and  consequently  of  facilities  for  transporting  the  product  when 
once  obtained,  interpose  serious  obstacles,  but  they  do  not  prevent 
adventurous   bands   of   rubber   gatherers   from   disappearing   from 


TRADE    CONDITIONS    IN    ECUADOR.  13 

civilization  for  months  at  a  time  and  reappearing  with  the  product. 
In  the  latter  part  of  1907  an  Argentine  rubber  gatherer  took  a  band 
of  Indians  into  regions  which  it  was  believed  never  had  been 
reached  either  from  Iquitos  and  the  Amazon  or  from  the  slopes  of 
the  Andes.  Other  parties  are  making  similar  quests  with  chances 
that  the  Ecuador  output  of  rubber  will  be  increased. 

One  bad  result  of  the  search  in  these  wild  regions  is  the  reckless 
cutting  down  of  the  trees.  Owing  to  the  remoteness  of  the  dis- 
tricts the  authorities  find  it  impossible  to  prevent  this  destruction, 
but  with  improvement  in  the  means  of  communication  so  that  the 
regions  are  more  accessible  this  waste  may  be  stopped  before  it 
entirely  wipes  out  the  gum  forests.  Ecuador  has  the  advantage  of 
possessing  the  shortest  natural  route  for  transporting  rubber  to 
the  seaboard.  This  is  by  means  of  the  navigable  Curaray  River 
from  a  point  on  which  a  railroad  120  miles  long  will  secure  connec- 
tion with  the  existing  line  to  Guayaquil. 

The  tendency  is  to  measure  the  value  of  the  crop  by  its  proceeds 
in  1900  when  the  price  was  high  and  the  product  was  handled  at  an 
unusually  good  profit.  In  that  year  10,031  quintals  of  112  pounds 
each  were  exported  and  the  price  obtained  was  $1,076,068,  or  $1.07 
per  pound.  In  1899  the  product  had  amounted  to  13,151  quintals, 
for  which  $1,333,364  was  obtained,  but  this  was  only  $1  per  pound. 
In  1904  the  rubber  exports  marketed  were  480  tons ;  in  1905,  575  tons ; 
1906,  620  tons.  In  1906  the  amount  obtained  for  the  crop  was 
$775,000.  The  product  for  1907  is  not  yet  known,  but  the  price  was 
satisfactory.  The  Government  seeks  to  encourage  the  cultivation  of 
rubber  by  giving  a  bounty  on  plantations  of  500  trees  and  upward 
after  five  years  growth  of  the  trees. 

COFFEE    AND    CANE    GROWING. 

Coffee  is  grown  for  domestic  consumption  and  some  for  export,  but 
this  crop  is  not  a  factor  in  the  world's  markets.  The  export  tax  was 
removed  several  years  ago  and  when  prices  are  high  shipments  of 
the  best  grade  are  made  to  the  United  States  and  Europe,  but  the 
market  on  which  Ecuador  depends  is  Chile.  The  nature  of  the  west 
coast  commerce  facilitates  the  interchange  of  coffee  for  flour,  wheat, 
and  vegetables.  The  home  consumption  is  estimated  at  6,000,000 
pounds.  The  exports  in  1905  amounted  to  1,579,382  kilos  valued  at 
about  $400,000  and  in  1906  2,657,000  kilos  valued  at  $465,000.  An 
export  crop  worth  $500,000  is  not  probable  unless  there  should  be  a 
very  marked  rise  in  price.  Under  present  conditions  the  only  pros- 
pect of  augmented  exports  comes  from  increased  Chilean  consump- 
tion. 

While  there  is  much  land  suitable  for  cane  raising,  sugar  has  never 
given  promise  of  becoming  an  extensive  industry,  though  there  has 


14  TRADE    CONDITIONS   IN    ECUADOR. 

been  some  development  in  the  coast  region.  A  group  of  plantations 
in  the  Yaguachi  district  enjoy  good  transportation  and  other  facili- 
ties and  have  central  mills.  They  are  managed  on  a  partially  mod- 
ern basis,  being  organized  into  a  trust.  In  other  districts  the  methods 
of  cultivating  and  grinding  the  cane  are  quite  primitive.  Increased 
production  must  depend  on  augmented  domestic  demand,  for  the 
reason  that  the  raw  sugar  can  not  be  exported  in  competition  with 
Peru.  When  there  have  been  exports  this  has  been  because  of  pro- 
duction above  the  normal  home  demand.  But  the  condition  more 
often  has  been  the  reverse,  and  when  the  tariff  duties  have  permitted 
there  have  been  importations  to  make  up  for  the  deficient  home  sup- 
ply. In  1904  a  few  hundred  tons  were  exported,  but  in  1906  the 
supply,  which  was  7,000  long  tons,  was  not  sufficient  for  the  demand 
and  1,200  tons  were  imported  from  Peru,  notwithstanding  the  pro- 
tests of  the  planters  against  the  removal  of  the  duty. 

The  cane-sugar  industry  acquires  some  importance  from  the  by- 
product of  rum  or  aguardiente.  This  is  distilled  in  some  form  in 
every  part  of  the  country,  often  secretly  in  order  to  avoid  the  taxes, 
and  its  consumption  among  the  Indian  population  is  by  far  too 
general  to  be  a  national  good.  There  are  no  exports  of  aguardiente 
except  for  special  reasons. 

TOBACCO,    COTTON,   AND   FRUITS. 

Tobacco  of  fair  quality  is  raised  in  the  coast  districts  by  small 
landowners,  but  its  cultivation  on  a  systematic  scale  is  not  common, 
though  the  soil  is  not  unfavorable.  In  past  years  it  was  grown  in 
quantities  sufficient  for  a  small  surplus  to  be  exported,  but  this  has 
almost  ceased  and  the  crop  is  limited  to  the  domestic  consumption, 
which  is  about  4,500,000  pounds  annually.  The  exports  in  1906  were 
140,000  pounds  valued  at  $11,000. 

During  the  civil  war  in  the  United  States  cotton  was  grown  in 
Ecuador  for  export  to  Lancashire.  When  the  war  ended  and  the 
price  became  normal  this  cultivation  ceased  and  it  has  not  since  been 
resumed  on  a  large  scale,  though  there  is  a  large  area  in  which  the 
soil  is  suitable.  The  present  production  is  not  always  sufficient  for 
the  few  native  cotton  mills  and  during  the  past  year  some  raw  cotton 
has  been  imported  by  them.  The  possibility  of  cotton  again  becoming 
an  export  crop  is  too  remote  to  call  for  further  consideration. 

Tropical  fruits,  especially  oranges  and  pineapples,  are  grown 
plentifully  and  their  cultivation  could  be  greatly  augmented  if  the 
demand  could  be  created  for  them,  but  the  markets  of  the  north  are 
not  accessible  since  transshipment  across  the  Isthmus  of  Panama 
would  be  necessary.  The  country  is  therefore  limited  to  supplying 
its  west  coast  neighbors,  Peru  and  Chile,  the  bulk-of  the  trade  being 
with  the  latter.     This  commerce  is  important  enough  to  encourage 


TRADE    CONDITIONS    IN    ECUADOR.  15 

the  establishment  of  a  fast  line  of  small  refrigerator  steamers  which 
has  been  proposed  by  an  American  company. 

GRAIN    AND   STOCK   RAISING. 

Ecuador  heretofore  has  not  produced  the  cereals  in  quantities  suffi- 
cient for  the  needs  of  its  own  population,  though  with  better  means 
of  distributing  the  crops  of  wheat,  corn,  barley,  etc.,  which  will  come 
from  the  railway  making  the  isolated  districts  more  accessible,  there 
will  be  some  increase  in  the  crops  grown.    This  will  not  be  for  export. 

Eice  is  grown  in  the  delta  districts  of  Yaguachi  and  Guayas  and 
in  some  years  there  have  been  small  exportations,  but  this  was  due 
usually  to  quantities  of  imported  rice  from  China  and  India,  of 
which  there  was  an  overstock.  Rice  is  the  food  of  the  poorer  classes, 
cheapness  is  essential  to  it,  and  since  the  imported  article  can  be  sold 
cheaper  than  that  of  native  production  its  cultivation  offers  little 
probability  of  being  extended. 

Cattle  raising  is  one  form  of  agricultural  industry  that  affords 
something  for  export  as  well  as  for  native  consumption.  Grazing 
lands  are  abundant  both  on  the  coast  and  in  the  plateaus  and  valleys 
of  the  interior.  Hides  command  remunerative  prices  and  the  exporta- 
tions vary  from  $350,000  to  $400,000  annually.  A  few  thousand 
dollars'  worth  of  goatskins  are  also  exported  and  a  larger  amount  of 
alligator  hides. 

In  the  inter- Andean  regions  sheep  are  raised  both  for  the  mutton 
and  for  the  wool.  The  equable  climate  makes  the  conditions  ideal. 
The  mutton  is  of  good  quality,  but  more  regard  is  paid  to  the  fleece. 
The  wool  is  not  so  good  as  that  from  sheep  in  the  northern  regions, 
but  it  is  good  enough  to  figure  in  the  world's  wool  market  if  it  were 
produced  in  quantities  sufficient  for  export  and  this  could  be  done 
by  increasing  the  flocks,  for  which  there  is  ample  room.  All  the 
wool  now  produced  is  utilized  for  the  local  needs,  most  of  it  being 
woven  into  a  coarse  baize  cloth. 

AVAILABLE   FORESTRY   PRODUCTS. 

Ecuador  has  timber  resources  and  some  dyewoods  and  fibers  in- 
cluding the  century  plant,  but  none  of  these  figure  largely  in  the 
foreign  commerce.  These  resources  are,  however,  utilized  for  do- 
mestic purposes.  Guayaquil  is  a  city  of  bamboos  and  cane  reeds 
covered  with  mortar  and  plaster,  the  use  of  pitch  pine  being  for- 
bidden as  a  precaution  against  fires. 

The  kopal  or  cork  tree  is  used  in  the  local  boat-building  industry 
and  the  balsas  or  native  rafts  are  entirely  constructed  of  it.  The 
remarkable  qualities  possessed  by  this  wood  have  been  frequently 
described.  It  is  obtained  in  the  immediate  neighborhood  of  Guaya- 
quil and  for  a  hundred  miles  or  more  up  the  rivers.    The  tree  grows 


16  TRADE    CONDITIONS    IN    ECUADOR. 

io  a  height  of  175  feet  and  from  the  trunks  logs  of  70  to  75  feet  in 
length  are  obtained.  The  wood  is  exported  to  Peru  and  Chile  for  use 
in  the  barren  coast  districts  which  are  treeless,  and  recently  some 
shipments  have  been  made  to  Great  Britain  and  to  the  United  States 
for  testing  in  the  construction  of  naval  vessels,  with  satisfactory 
results.  This  tree  is  also  known  as  the  ceiba  or  cotton  wood,  and 
from  it  is  obtained  the  fine  fiber  known  as  silk  cotton. 

Bamboos  or  bamboo  splits  are  exported  to  the  nitrate  region  of 
Chile  for  building  purposes  similar  to  the  use  made  of  them  in  Guay- 
aquil. A  more  valuable  forest  product  is  the  guayacan,  a  species  of 
lignum  vita?.  This  hardwood  exists  in  abundance  and  has  special 
utility  for  railroad  ties,  but  it  has  not  yet  become  an  export  com- 
modity. Most  of  the  ties  for  the  Guayaquil  and  Quito  Railway 
Mere  imported. 

MINES  AND  MINERALS. 

The  value  of  Ecuador's  mineral  resources  is  yet  problematical. 
They  consist  in  gold  and  unexploited  coal  deposits.  In  the  north 
or  Esmeraldas  district  large  sums  were  spent  by  British  capitalists 
in  exploiting  the  Playa  de  Oro  properties,  but  without  result,  and 
these  were  definitely  abandoned  in  1906.  In  the  south  better  success 
has  attended  the  large  investments  made  by  American  capitalists. 
The  South  American  Development  Company,  a  New  York  corpora- 
tion, is  enlarging  its  facilities  for  working  the  low-grade  ores  of  the 
Zaruma  district,  and  shipments  of  gold  bars  and  concentrated  cyan- 
ide slimes  are  now  being  made  regularly.  The  total  of  these  expor- 
tation for  the  recent  year  is  reported  to  be  about  $250,000,  of 
which  $100,000  was  gold  bars  and  the  balance  cyanide  slimes.  The 
slimes,  which  consist  of  gold,  silver,  zinc,  and  iron,  are  shipped  to 
San  Francisco  for  treatment.  The  prospecting  that  has  been  done 
indicates  valuable  ore  deposits  in  southern  Ecuador,  but  the  condi- 
tions are  not  such  as  to  invite  the-  heavy  investments  of  capital  nec- 
essary for  their  development  until  transportation  facilities  are  im- 
proved by  getting  railroads  into  this  region. 

COAL  AND   PETROLEUM  DEPOSITS. 

It  has  been  demonstrated  that  the  coal  deposits  which  lie  near  the 
main  line  of  the  Guayaquil  and  Quito  Railway  on  the  Columbe  River, 
and  which  it  was  expected  would  furnish  fuel,  can  not  be  worked. 
There  were  vertical  outcrops  with  veins  varying  in  width  from  18 
inches  to  5  feet.  The  veins  were  reached  by  a  tunnel  from  the  base 
of  the  mountain  and  by  cross  cutting.  It  developed,  however,  that 
in  this  region  of  heavy  landslides  the  mountain  is  still  in  motion  and 
the  coal  veins,  which  lie  between  clay  and  solid  rock,  are  constantly 


TRADE    CONDITIONS    IN    ECUADOR.  17 

being  ground  to  powder,  so  that  their  exploitation  is  not  feasible. 
Coal  beds  about  60  miles  distant  are  not  subject  to  this  process  and 
later  a  branch  of  the  railroad  may  be  built  to  them  at  an  estimated 
cost  of  $3,000,000.  But  in  view  of  the  conditions  coal  is  not  likely 
to  become  an  article  of  export  from  Ecuador. 

Petroleum  exists  in  the  sandy  coast  strip  of  Santa  Elena  and  the 
crude  product  is  extracted  and  utilized  for  fuel  by  the  brewery  and 
the  electric-light  companies  of  Guayaquil,  but  for  illuminating  and 
lubricating  purposes  it  is  cheaper  to  make  importations  than  to  ex- 
tract it  from  these  fields.  There  is  also  some  asphalt,  which  is  not 
sufficiently  promising  to  exploit  for  commercial  purposes.  The  salt 
mines,  which  are  operated  as  a  Government  monopoly,  supply  a 
small  quantity  for  export  to  Colombia,  in  addition  to  meeting  the 
domestic  demand. 

NATIONAL  INDUSTRIES. 

Toquilla  straw  or  paja  is  one  of  the  most  valuable  agricultural 
resources  that  the  country  possesses,  but  as  it  is  the  basis  of  manu- 
factured articles  of  export  I  have  reserved  the  subject  for  separate 
consideration.  It  may  be  said  to  be  the  one  national  manufacturing 
industry  of  Ecuador,  though  not  a  factory  one  in  which  machinery 
can  be  used,  since  its  nature  requires  handicraft  in  making  the  hats 
and  it  always  will  be  a  cottage  industry. 

The  conditions  governing  the  production  of  the  straw  and  the 
manufacture  of  the  hats  have  been  so  well  and  so  fully  described  by 
Consul-General  Dietrich  in  his  various  reports  that  the  relation  of 
the  straw  hat  to  foreign  trade  is  all  that  calls  for  consideration  on 
my  part.  Hat  making  for  export  has  always  been  carried  on,  and  as 
far  back  as  1857  there  were  exports  to  the  value  of  $150,000.  These 
rose  and  fell  through  various  causes  and  it  is  only  since  1900  that 
the  foreign  market  has  been  firmly  established,  the  demand  being,  if 
anything,  in  excess  of  the  supply  and  prices  having  risen  more  than 
proportionately  to  the  increase  in  the  cost  of  the  raw  material.  In 
1900  the  total  value  of  the  hats  exported  was  $150,000,  or  about  what 
it  had  been  in  1857.  In  1903  the  value  of  the  manufactured  hats 
exported  was  $350,000;  in  1906,  $1,125,000,  and  for  1907  the  estimate 
is  from  $1,400,000  to  $1,500,000.  The  growth  of  this  cabin  or  cot- 
tage industry  appears  to  be  limited  only  by  the  production  of  the 
raw  material  which  is  its  basis.  The  exports  form  a  notable  national 
asset  in  providing  the  means  for  foreign  purchases  and  the  manu- 
facture of  the  hats  adds  materially  to  the  resources  of  some  thousands 
of  persons  who  are  engaged  in  it,  particularly  in  the  districts  of 
Cuenca  and  Manta. 

*  (5*091— 09 3 


lo  TRADH    CONDITIONS    IN     ECUADOR, 

VAHIOl  S    SMALL    FACTORIES. 

Ecuador  hardly  can  be  said  to  have  other  national  industries.  In 
Guayaquil  there  are  small  boat-building  and  ship-repair  yards  and 
foundries,  breweries  and  ice  factories,  cigar  factories  and  candle 
and  soap  factories,  as  well  as  a  confectionery  establishment  and  a 
small  sugar  refinery,  yet  these  can  not  be  considered  more  than  local 
industries.  The  cotton  mills  at  Otovalo  in  the  north  have  been  suc- 
cessful with  the  native  labor,  but  the  example  has  not  been  followed 
by  establishing  mills  in  other  sections,  and  their  output  is  for  neigh- 
borhood consumption,  the  cloths  rarely  being  seen  in  Guayaquil  or 
Quito. 

At  several  places  in  the  interior  there  are  flour  mills  which  grind 
the  wheat  of  the  districts  in  which  they  are  located,  but  all  of  these 
are  operated  on  a  modest  scale.  Breweries  are  established  in  Quito 
and  Cuenca  and  there  is  little  else  in  the  way  of  manufactures.  It  is 
clear  that  for  a  long  period  yet  to  come  Ecuador  will  not  be  a  market 
for  installations  of  machinery  with  which  to  supply  the  means  of 
providing  for  its  own  wants:  but  will  continue  to  purchase  manu- 
factured articles  and  some  foodstuffs  with  the  proceeds  of  the  cocoa, 
the  vegetable  ivory,  the  rubber,  coffee,  hides,  and  hats  that  are  ex- 
ported. 

RAILWAY  SYSTEMS. 

How  far  the  exports  may  be  increased  and  also  the  imports  depends 
on  various  considerations.  The  possibility  and  the  necessity  of 
adding  to  the  cocoa  and  other  agricultural  crops  T  have  already  indi- 
cated. Another  phase  of  the  same  subject  relates  to  the  encourage- 
ment to  be  given  to  production  by  providing  the  facilities  for  ex- 
changing and  marketing  the  products  of  the  country.  The  most 
important  of  these  is  facilities  of  transportation  and  among  them 
nothing  approaches  railway  systems  in  importance. 

The  one  central  system  which  Ecuador  possesses  is  the  Guayaquil 
and  Quito  Line,  better  known  as  the  American  Railway,  since  it  has 
been  built  and  is  operated  by  Americans.  Its  construction  has  taken 
ten  years,  and  at  this  writing  the  rails  have  been  laid  so  near  to  Quito 
and  the  trains  are  running  to  within  so  short  a  distance  of  the  capital 
that  the  central  line  may  be  considered  as  finished.  The  distance  from 
Duran,  on  the  Guayas  River  opposite  Guayaquil,  where  extensive 
terminal  facilities  have  been  constructed,  to  Quito  is  290  miles. 

The  railroad  crosses  the  productive  tropical  plains  of  the  delta 
and  strikes  abruptly  into  the  canyons  of  the  Cordilleras,  reaching  the 
inter-Andean  plateaus  where  the  cereals  and  other  products  of  the 
temperate  regions  are  grown,  though  on  the  equatorial  line.  These 
crops  are  produced  and  flocks  are  pastured  at  elevations  ranging 
from  5,000  to  12.000  feet.     The  railroad  gage  is  :>>]  feet.     The  heaviest 


TRADE    CONDITIONS    IN    ECUADOR.  ]  9 

o-rade  is  5^  per  cent.  While  there  are  many  bridges  both  of  stone 
and  of  iron  and  steel  there  are  few  tunnels.  The  most  serious  of  the 
many  obstacles  to  railway  building  which  nature  had  interposed 
were  overcome  by  means  of  a  switchback  up  the  Pistichi  Mountain, 
better  known  as  the  Devil's  Nose,  and  the  bold  Alausi  loop.  The 
heart  of  the  Andes  is  penetrated  2  miles  above  sea  level,  or  at  about 
i0,650  feet,  in  the  Palmira  Pass;  but  the  flanks  of  the  giant  extinct 
volcano  Chimborazo  are  traversed  at  an  elevation  of  12,000  feet. 

OPPOSITION   AMD   BENEFITS. 

This  brief  indication  of  the  engineering  features  of  the  railway  is 
equivalent  to  stating  that  it  has  been  a  costly  piece  of  mountain  rail- 
way construction,  but  this  subject  need  not  be  gone  into.  The  sig- 
nificance is  that  at  the  beginning  of  1908  Ecuador  has  a  railway 
which  has  crossed  the  Andean  wall  and  brought  the  interior  into 
quick  and  direct  communication  with  the  coast.  Its  economic  and 
commercial  effects  have  not  had  time  to  be  demonstrated,  but  one 
result  has  been  to  improve  the  material  condition  of  a  section  of  the 
population  by  the  chances  it  has  given  for  work  at  good  wages. 

This  has  aroused  the  opposition  of  some  of  the  great  landowners, 
who  until  the  coming  of  the  railway  were  able  to  employ  the  peons 
for  a  few  cents  a  day.  The  shifting  of  freight  from  mule  pack  trains 
and  bullock  carts  to  the  railway  cars,  a  process  which  is  still  going 
on,  also  has  caused  opposition  and  this  opposition,  as  in  the  case  of 
the  landowners,  has  been  manifested  somewhat  violently.  But  such 
incidents  are  temporary  and  do  not  interfere  with  the  real  utility  of 
the  line  as  a  means  of  distribution  for  freight  and  of  development  of 
new  traffic  that  the  mules  and  the  bullock  carts  never  could  have 
created. 

One  of  the  earliest  results  of  the  railroad  has  been  to  provide  better 
means  for  distributing  the  cereal  products  of  the  isolated  districts 
among  one  another  and  also  to  enable  these  products,  whenever  there 
is  an  excess  above  the  local  demand,  to  be  brought  to  Guayaquil  and 
the  coast.  Wheat  is  not  yet  produced  in  quantities  sufficient  to  render 
the  importations  from  Chile  and  California  unnecessary,  but  barley 
and  alfalfa  have  already  found  a  valuable  outlet.  On  imports  the 
effect  of  the  railway  will  be  very  beneficial,  for  it  will  enable  the 
manufactured  articles  to  be  transported  to  the  interior  more  cheaply, 
and  when  the  price,  in  which  transportation  heretofore  has  been  so 
heavy  a  factor,  is  cheapened,  the  consumption  will  increase. 

EXTENSIONS  AND  PROJECTS. 

These  effects  will  further  be  felt  when  the  north  and  south  exten- 
sions of  the  railway  which  are  part  of  President  Alfaro's  general 


20  TRADE    CONDITIONS    IX    ECUADOR, 

project  are  carried  out.  These  include  a  line  from  Cuenca  in  the 
south,  95  miles,  to  join  the  Guayaquil  and  Quito  at  Huigra,  and  a 
branch  north  to  Ibarra,  100  miles  from  Quito.  The  commerce  of  the 
southern  district  is  large  and  on  this  account  the  Cuenca  branch  will 
be  the  first  one  to  be  built. 

A  line  from  Ambato  on  the  Guayaquil  and  Quito  Railway  to  the 
Curaray  River,  Avhose  waters  are  navigable  to  the  affluents  of  the 
Amazon,  also  has  been  surveyed.  The  distance  is  120  miles.  The 
condition  of  the  national  finances  does  not  indicate  that  any  of  these 
lines  is  likely  to  be  of  immediate  realization,  yet  with  the  central 
trunk  in  operation,  these  north  and  south  feeders  are  certain  to  be 
built  ultimately.  In  the  meantime  the  improvement  of  the  cart 
roads  and  the  mule  trails  in  order  to  reach  the  existing  railway 
more  easily  is  assured  to  the  benefit  both  of  the  internal  commerce 
and  of  imported  merchandise. 

Other  railway  projects  have  for  their  object  the  connection  of 
the  minor  ports  with  the  producing  territory  back  from  the  coast. 
There  are  five  of  these  projects:  From  Puerto  Bolivar  to  Machala, 
from  the  Bay  of  Caraquez  to  Chone,  from  Manta  to  Santa  Ana, 
from  Salinas  to  some  point  on  the  coast  near  Santa  Elena  north  of 
the  Gulf  of  Guayaquil,  and  from  Santa  Rosa  to  Zaruma.  Little 
progress  has  been  made  with  any  of  them.  Some  rails  which  had 
been  paid  for  with  public  funds  were  laid  in  the  Bahia  cacao  district 
toward  Chone.  but  the  work  was  abandoned.  On  the  line  between 
Puerto  Bolivar  and  Machala  there  has  been  some  extension  into 
the  cacao  districts  and  to  provide  for  the  seacoast  traffic. 

PUBLIC  IMPROVEMENTS. 

The  corollary  to  the  completion  of  the  Guayaquil  and  Quito  Rail- 
way across  the  Andes  to  the  capital  should  be  a  well-matured  plan 
of  public  works  and  particularly  of  sanitary  works  if  Guayaquil 
and  the  whole  country  are  to  reap  the  full  benefit  of  improved 
transportation  facilities.  This  is  of  especial  importance  both  to  the 
import  and  the  export  trade.  Commerce  now  pays  heavy  tribute  to 
the  unsanitary  conditions.  Steamers  are  compelled  to  anchor  well 
down  the  river  at  a  point  opposite  the  Matadero  or  slaughter  house. 
and  it  is  estimated  that  the  Guayaquil  merchants  pay  $200,000  a 
year  for  lighterage  which  might  be  saved. 

The  interruption  of  west  coast  traffic  which  is  experienced  with 
the  bubonic  plague  always  threatening  and  yellow  fever  always 
existing  would  justify  a  heavy  expenditure  .jointly  by  the  munici- 
pality and  the  national  Government  in  order  to  put  the  port  into 
sanitary  condition  by  permanent  works  which  would  insure  the 
continuance  of  that  condition.     Bubonic  plague  has  not  yet  invaded 


TRADE    CONDITIONS    IN    ECUADOR.  21 

Ecuador,  but  it  is  an  ever-present  menace,  and  the  yellow  fever 
record  of  Guayaquil,  with  its  heavy  percentage  of  fatalities  for 
foreigners,  is  common  history.  Smallpox  also  is  frequently  epidemic, 
with  a  larger  number  of  deaths  than  is  credited  to  yellow  fever,  and 
from  this  disease  the  natives  are  not  exempt.  Its  ravages  are  chiefly 
among  them. 

SANITATION    PLANS    AND    WATERWORKS. 

Plans  have  been  prepared  under  the  direction  of  the  board  of 
health  for  a  very  complete  system  of  sewerage,  paving,  and  other 
improvements,  which  if  carried  out  would  go  a  long  way  toward 
the  sanitary  reconstruction  of  Guayaquil,  and  whether  put  into  effect 
or  not  the  information  published  in  connection  with  them  affords 
valuable  suggestions.  The  idea  is  that  a  company  or  syndicate  may 
be  formed  to  undertake  the  work  or  to  provide  the  necessary  funds 
under  an  arrangement  with  the  municipality  of  Guayaquil.  If  this 
project  should  be  carried  out  the  improvement  in  the  general  health 
conditions  undoubtedly  would  be  of  much  benefit  to  commerce. 

However,  it  does  not  fully  meet  the  situation  as  to  yellow  fever,  as 
there  is  no  provision  for  control  by  preventing  the  mosquito  infec- 
tion as  has  been  done  so  successfully  by  the  United  States  authorities 
on  the  Isthmus  of  Panama.  By  putting  into  practice  the  regulations 
of  the  international  Pan-American  sanitary  convention,  through 
a  treaty  or  other  arrangement  which  would  permit  the  coopera- 
tion of  the  United  States  sanitary  authorities,  Guayaquil  could  be 
shielded  against  yellow  fever  and  other  epidemics  as  effectively  as 
are  Panama  and  Colon,  and  the  gain  to  commerce  in  general  and  to 
Ecuador's  commerce  in  particular  would  be  immense. 

That  the  municipality  is  capable  of  meeting  the  situation,  if  it 
chooses,  is  shown  by  what  it  already  has  done  in  the  way  of  public 
works.  An  American  contracting  engineer  brought  water  down 
from  the  mountains  and  under  the  river,  thus  providing  the  city 
with  a  complete  system  of  waterworks,  which  insures  a  sufficient 
supply  at  all  times.  The  destructive  fires  which  swept  the  city  at 
regular  intervals  have  been  minimized  by  rebuilding  with  streets  not 
less  than  100  feet  in  width  and  the  installation  of  a  pumping  system 
that  has  proved  very  effective  and  has  caused  the  heavy  premiums 
formerly  paid  for  fire  insurance  to  be  materially  reduced.  Garbage 
crematories  of  the  most  modern  kind  have  been  installed  for  the  dis- 
posal of  the  city's  refuse.  These  improvements  show  that  public 
.spirit  is  not  lacking.  All  that  is  needed  is  for  this  public  spirit  to 
be  directed  into  the  broader  channels  which  will  make  Guayaquil  a 
healthful  port  and  insure  to  it  the  benefits  of  the  commercial  advan- 
tages which  its  geographical  position  on  the  west  coast  gives  it  the 
opportunity  to  realize. 


22 


TRADE    CONDITIONS    IX     KCIWDOR. 


FOREIGN  COMMERCE. 

Since  I  have  described  the  products  of  Ecuador  which  form  the 
basis  of  its  foreign  purchases,  the  international  commerce  may  be 
studied  in  its  entirety  before  analyzing  in  detail  the  country  as  a 
market  for  foreign  goods.  Statistics  are  somewhat  backward,  but 
the  full  details  for  the  calendar  year  1906  are  given  and  it  may  be 
said  that  the  general  movement  of  importations  and  exportations  dur- 
ing 1907  showed  no  marked  variation  from  the  previous  year.  Fol- 
lowing are  the  figures  for  1900  (the  value  of  a  sucre  being  48.7  cents)  : 

EXPORTS. 


Articles. 

Value. 

Sucres. 

12,900 

12,198,4S1 

931,369 

29,150 

1,546,189 

722,703 
4,422 

11,999 
108,793 

Articles. 

Value. 

Cotton .        „    .. 

Gold  ore  and  bars..       

Sucres. 
309, 432 

Cocoa—    

Gold  specie.. _  . 

547,091 

Coffee 

Silver  coins  _ 

7,480 

2,390,810 

22,113 

Cascara  bark 

Rubber             _  .    _     ...  . 

Tobacco 

Hides: 

Tagua  (vegetable  ivory) 

2,615,337 

Cattle 

Goat 

Miscellaneous : 

Total-. 

508,436 

Alligator    .    _.  ._                   ..    _. 

21,964,714 

Fruits 

IMPORTS. 


Alimentary  articles: 

Animal 

Vegetable 

Mineral 

Textiles 

Raw  material: 

Animal 

Vegetable 

Mineral 

Vestments,  line  cloths,  jewels,  and 
articles  of  personal  adornment 

Machinery,  tools,  and  instruments.. 

Household   furnishings,    articles  of 
domestic  use,  furniture,  etc 


Sucres. 
1,371,032 
1,244,298 
314 
3,533,208 


181,960 
124,915 


1,540,834 
1,975,759 


1,598,821 


Railway  and  telegraph  material,  lo- 
comotives, etc 

Tobacco  and  cigars 

Mineral  and  metallic  substances 

Articles  for  the  fine  arts,   scientilic 

instruments,  etc 

Drugs  and  medicines 

Firearms  and  accessories : 

Specie  and  bank  notes 

Miscellaneous 


Sucre* 


74, 

310, 
518, 
136, 
1,982, 
623, 


354 
553 
403 

922 

841 
377 
910 
402 


Total 17,011, 


The  total  imports  and  exports  amounted  to  88,976,319  sucres. 

It  will  be  observed  that  specie  and  bank  notes  figure  in  the  re- 
turns as  part  of  the  commercial  movement.  To  get  at  the  merchan- 
dise they  should  be  eliminated.  Thus  with  the  gold  and  silver  coin 
which  was  exported  during  1906  to  the  amount  of  554,571  sucres 
deducted,  the  total  exports  should  be  21,410,143  sucres.  Similarly, 
with  the  1,982,910  sucres  of  specie  and  bank  notes  which  figure  in  the 
imports  deducted,  these  would  amount  to  15,028,095  sucres,  showing 
that  the  commodities  purchased  are  considerably  less  than  those 
which  are  sold.  Yet  this  apparent  loss  in  merchandise  is  made  up  by 
the  addition  of  20  per  cent  to  the  valuations  as  given  in  the  official 
statistics,  which  the  mercantile  community  of  Guayaquil  is  in  the 
habit  of  making  to  both  exportations  and  importations,  in  order  to 
arrive  at  the  true  value  of  the  foreign  trade.  With  these  deductions 
and  additions  allowed  the  movement  of  merchandise  in  and  out  of 
Ecuador  during  1906  would  be  $22,000,000. 


TRADE    CONDITIONS    IN    ECUADOR. 


23 


Tlie  commerce  by  countries  in  1906  is  exhibited  in  the  appended 
tables,  as  shown  bv  official  statistics: 


Country 


United  States 

Germany 

United  Kingdom 

Argentina 

Australia 

Austria 

Belgium 

Bolivia 

Brazil ^. 

Central  America 

Colombia 

Cuba 

Other  West  Indies-- 

Chile 


Imports. 

Exports. 

Sucres. 

Sucres.     j 

4,656,895 

6,785,039 

3,095,144 

3,595,716 

5,560,343 

1,327,505 

856 

132,012 

9,770 

200 

40,875 

115,065 

776,248 

15,325 

1,000  ; 

10,000  ! 

54,773 

40,797 

49,664 

27,413 

4,041 

40,450 

20 

15,038 

198,552 

818,698 

Country. 


China 

Spain 

Prance 

Holland- 
Italy 

Mexico 

Peru 

Panama- 
Uruguay.. 
Venezuela- 
Norway-- 


Imports.   !    Exports. 


Sucres. 
55,221 
492,224 

1,275,797 

545 

521,684 


205,953 
5,890 
7,110 


Total ;  17,011,605 


Sucres. 

"II6oi~529 

6,821,211 
73,400 

343,572 
43,441 

683,583 
35,020 
20,725 


6,000 


21,984,714 


SHARE  OF  LEADING  COMPETING  NATIONS. 

The  imports  from  the  four  leading  countries  may  be  studied  from 
the  following  comparisons  for  a  series  of  years,  with  the  explanation 
that  specie,  which  is  drawn  principally  from  England,  is  included: 


Year. 

United 
States. 

1900 

Sucres. 
3,434,430 
3,966,308 
2,982,660 
2,898  537 

1901 

1902 

1903 

1904 _ 

4,897,848 
4,542,272 
4,656,895 

1905-       .     . 

1903 

United 
Kingdom. 

France. 

Sucres. 

Sucres. 

3,974,807 

1,240,677 

3,575,100 

1,995,693 

5,750,785 

1,588,030 

3,196,481 

1,011,738 

4,009,757 

1,234,516 

4,558,547 

1,118,793 

5,560,343 

1,275,797 

Germany. 


Sucres. 
2,577,290 
2,712,467 
2,085,900 
2,000,001 
2,985,114 
3,101,957 
3,095,144 


Some  features  of  this  trade  as  distributed  among  the  various  coun- 
tries call  for  explanation.  While  the  imports  from  the  European 
nations  can  be  rather  accurately  accounted  for,  the  exports  do  not 
measure  the  real  commerce  of  Ecuador  with  several  of  them,  because 
so  large  a  proportion  is  taken  "  for  order  "  and  distributed  from 
Southampton,  Havre,  or  Hamburg,  Thus  in  1906  of  the  imports 
credited  to  France— 6,821,000  sucres— cocoa  constituted  6,072,000 
sucres,  and  it  is  known  that  Germany  and  other  continental  countries 
reimport  it  from  France  in  large  quantities,  Germany  in  particular 
supplementing  its  own  direct  importations  from  Ecuador. 

In  the  imports  Great  Britain  supplies  much  less  of  the  merchan- 
dise than  would  appear,  since  the  imports  of  specie  are  almost  en- 
tirely from  that  source  and  in  1906  the  importation  of  sovereigns  was 
£200,000  or  1,000,000  sucres.  Similarly,  specie  to  the  amount  of 
547,000  sucres  should  be  deducted  from  the  exports  to  Chile  and 
Peru  in  order  to  measure  the  merchandise  exports  to  them  correctly, 
since  both  these  countries  draw  English  sovereigns  from  Ecuador. 


24  TRADE    CONDITIONS    IN    ECUADOR. 


AMERICA    THE    BEST    CUSTOMER. 


The  trade  of  the  United  States  and  Ecuador  is  not  subject  to  the 

deductions  or  additions  which  are  necessary  in  the  case  of  other  conn 
tries.  The  Ecuador  products  imported  into  the  States  are  consumed 
there  and  the  exports  to  Ecuador  consist  of  general  merchandise — 
specie  exports  being  rare.  The  total  trade  in  1906  approximated 
$6,000,000.  The  United  States  is  a  large  buyer  of  all  the  leading 
Ecuador  products.  In  the  year  for  which  the  statistics  are  given  it 
took  cocoa  to  the  value  of  2,369,000  sucres;  rubber,  1,209,000  sucres: 
hides,  640,000  sucres;  tagua  or  vegetable  ivory,  638,000  sucres;  and 
straw  hats,  1,133,000  sucres.  Its  position  as  the  best  buyer  of  Ecua- 
dor products  fairly  entitles  it  to  be  the  largest  seller  to  that  country 
and  it  maintains  the  geographical  advantage.  The  bulk  of  the  com- 
merce both  ways  is  through  New  York,  but  Mississippi  Valley  prod- 
ucts are  shipped  through  New  Orleans  to  the  value  of  $250,000  yearly 
and  San  Erancisco  and  the  other  Pacific  coast  ports  have  a  direct 
trade. 

Germany,  which  is  a  heavy  buyer  of  vegetable  ivory,  cocoa,  and 
straw  hats,  clearly  is  next  to  the  United  States  in  the  actual  exchange 
of  commodities  though  the  statistics  appear  to  give  Erance  the  lead 
by  reason  of  the  cocoa  imported  for  transshipment.  Great  Britain, 
after  the  deduction  of  specie  shipments,  is  still  able  to  show  commodi- 
ties exported  to  more  than  twice  the  value  of  those  imported.  Its 
control  of  the  cotton  piece  goods  trade  is  the  basis  of  this  advantage 
as  compared  with  other  countries.  It  also  ships  coal  and  a  variety 
of  iron  and  steel  products.  Its  largest  purchase  is  of  cocoa,  the 
amount  being  800,000  sucres,  and  after  that  straw  hats,  300,000  sucres. 
France  in  addition  to  the  cocoa  imported  for  consumption  and  dis- 
tribution takes  vegetable  ivory  to  the  value  of  374,000  sucres  and 
hats,  135,000  sucres.  China  and  Australia  provide  a  small  trans- 
Pacific  trade,  rice  and  silks  being  imported  from  China  and  coal 
from  Australia. 

needp^d  improvements. 

In  considering  Ecuador  as  a  future  market  the  prospect  or  the 
probability  of  public  works  such  as  harbor  improvements  and  the 
sewerage  and  sanitation  of  Guayaquil  must  be  taken  into  account, 
but  this  can  not  be  done  with  definiteness.  A  new  market  house  has 
been  constructed  in  Guayaquil  but  nothing  has  been  done  toward  the 
new  custom-house.  The  extensive  iron  pier  and  wharf  and  similar 
improvements  for  which  concessions  have  been  given  by  the  National 
Congress  to  various  parties  at  different  times  make  little  headway. 
When  these  works  and  others  like  them  are  once  entered  upon  it  will 
mean  a  decided  demand  for  iron  and  steel  products.  In  the  mean- 
time some  public  works  in  other  cities  are  in  a  more  promising  state. 
Quito  has  an  insufficient  water  supply  and  a  new  system  of  water- 


TRADE    CONDITIONS    IN    ECUADOR.  25 

works  is  declared  to  be  imperative.  A  contract  was  made  for  the 
system,  but  it  has  been  in  abeyance.  Now  there  is  said  to  be  a  pros- 
pect that  it  will  be  put  into  effect.  In  the  town  of  Biobamba  a 
contract  has  been  made  with  an  American  engineer  for  a  system  of 
waterworks. 

AMERICAN    MILLS   COULD    NOT   ACCEPT   ALL   ORDERS. 

The  importation  of  steel  rails  and  railway  material  may  for  a 
time  show  a  falling  off  as  compared  with  1906  and  1907.  The  com- 
pletion of  the  Guayaquil  and  Quito  line  to  the  capital  probably  will 
be  folloAved  by  the  construction  of  some  short  spurs  and  extensions 
in  the  delta  district,  but  until  the  building  of  the  larger  branches 
from  Cuenca  and  Ibarra,  respectively,  to  the  main  line  is  begun, 
or  the  Government  finds  itself  in  a  position  to  finance  the  Curaray 
River  branch  in  order  to  get  to  the  rubber  district  of  the  navigable 
tributaries  of  the  Amazon,  large  purchases  of  rails  and  railway  ma- 
terial are  not  to  be  expected.  The  Guayaquil  and  Quito  Railway  has 
been  supplied  with  American  rails  and  rolling  stock  except  when*  the 
inability  of  the  mills  of  the  United  States  to  fill  the  orders  in  time 
caused  some  purchases  to  be  made  abroad.  While  there  will  be  some 
falling  off  in  rails  this  loss  will  be  likely  to  be  made  up  by  gains  in 
other  iron  and  steel  products.  Should  the  price  of  rails  drop  that 
also  may  encourage  the  revival  of  some  of  the  projects  for  railroad 
building.  With  the  freight  and  other  charges  the  rails  for  the  Guay- 
aquil and  Quito  line  cost  on  an  average  $3G  per  ton  laid  down  on 
the  wharf  at  Duran. 

GENERAL  DEVELOPMENT. 

Electrical  installation  is  likely  to  be  continued  on  a  larger  scale 
than  during  the  past.  Up  to  the  present  time  there  have  been  few 
electrical  power  plants  established,  though  the  available  force 
abounds  in  the  waters  of  the  Andes.  Guayaquil  has  an  electric-light 
system  which  is  utilized  in  business  blocks  and  private  dwellings  and 
on  the  wharves  and  river  landings,  but  the  streets  are  lighted  by  gas 
and  the  change  to  electricity  awaits  the  convenience  of  the  gas  com- 
pany, which  has  shown  no  disposition  to  forego  the  advantages  of  its 
contract  with  the  municipality  unless  compensating  concessions  are 
made.  So  also  the  company  which  proposes  to  substitute  the  trolley 
for  horse  cars  has  not  yet  been  able  to  put  into  effect  an  arrangement 
for  electrifying  the  tramways.  But  these  changes  are  sure  to  be 
made. 

A  project  has  been  formed  by  Ecuadorian  and  American  capitalists 
for  transmitting  power  to  Guayaquil  from  the  Chimbo  River,  55 
miles  distant,  which  will  be  ample  for  lighting,  traction,  and  such 
light  manufacturing  as  exists.  When  this  installation  is  made  the 
purchases  of  machinery  will  be  an  important  item. 


26  TEADE    CONDITIONS    IN    ECUADOR. 

The  Anglo-French  company  which  has  the  electric  power  con- 
cession in  Quito  has  extended  its  plant  and  the  facilities  for  illumi- 
nating the  city  have  been  enlarged  and  the  number  of  lights  increased. 
A  more  important  extension  is  the  projected  trolley  tramway  system. 
The  hilly  streets  of  this  ancient  capital  of  Inca  civilization  have  to 
be  traversed  on  foot  just  as  in  the  time  of  the  Incas.  Many  of  the 
streets  are  too  steep  for  vehicles  and  a  horse-car  system  would  be  im- 
practicable. So  up  to  the  present  the  only  means  of  getting  about 
has  been  by  strenuous  pedestrianism.  Work  will  be  begun  on  the 
trolley  installation  during  the  year. 

INTRODUCTION   OF  MODERN    MECHANISMS. 

Some  of  the  smaller  cities  may  follow  the  example  of  Guayaquil 
and  Quito  and  provide  for  electric  lighting.  Extensions  of  the  Gov- 
ernment telegraph  and  telephone  lines  will  be  made  and  there  is  a 
slow  spreading  of  local  telephone  systems.  Cooling  appliances  are 
quite  common  in  Guayaquil.  Most  of  the  electrical  installation  of 
all  kinds,  even  where  European  capital  is  engaged  in  the  enterprise, 
is  made  by  American  companies  and  the  setting  up  of  new  plants 
means  increased  importations  from  the  United  States. 

Agricultural  machinery  is  one  of  the  lines  for  which  markets  are 
yet  to  be  created  in  Ecuador  Irrigation  plants  are  vaguely  com- 
prehended, but  some  Ecuador  landowners  look  forward  to  introduc- 
ing them  in  the  southern  coast  section  of  the  country  where  the  cocoa 
production  is  falling  off  so  markedly  on  account  of  the  increasing 
dryness  of  the  climate.  That  this  change  would  come  had  the  au- 
thority of  as  high  a  scientific  authority  as  Alexander  von  Humboldt 
a  centurv  ago.  Xow  it  is  coming  with  a  sAviftness  that  enforces  the 
necessity  of  turning  to  artificial  means  in  order  not  to  lose  the  rich- 
ness of  a  soil  whose  productivity  has  been  demonstrated  through  a 
long  series  of  years. 

Suggestions  have  been  made  for  pumping  plants  in  the  Santa  Rosa 
district  where  the  drying  up  of  the  coast  lands  is  most  noticeable  and 
the  sands  are  encroaching  most  rapidly  on  the  alluvial  soil,  but  there 
is  no  definite  project.  Makers  of  irrigation  machinery  in  the  United 
States  might  find  it  worth  while  to  send  an  expert  to  study  this 
region  and  provide  local  landowners  and  capitalists  with  specific 
statements  of  the  kind  of  plants  which  should  be  installed  and  esti- 
mates of  the  expense,  for  the  landowners,  while  recognizing  the 
agricultural  situation,  are  slow  to  act  on  their  own  initiative. 

LEADING  MERCANTILE  IMPORTS. 

Thrashing  machines  and  even  harvesters  are  not  likely  to  find  a 
market  soon,  though  some  of  the  grain  fields  in  the  inter- Andean  pla- 
teaus are  extensive  enough  to  call  for  them.  But  the  owners  of  the 
big  estates  are  satisfied  with  the  results  they  obtained  from  the  cheap 


TRADE    CONDITIONS    IN    ECUADOR.  27 

labor  of  the  peons  through  scythe  and  sickle  and  hand  flail.  For 
plows  there  is  a  better  prospect.  The  Indian  cultivator  still  clings 
to  the  wood  prong  both  for  turning  up  the  soil  on  his  own  little 
patch  of  the  mountain  side  and  on  the  larger  farm  of  the  landowner. 
In  the  majority  of  the  regions  of  the  interior  no  other  kind  of  plow 
ever  has  been  seen.  Yet  the  railway  is  already  working  a  change. 
At  Ambato,  which  is  the  center  of  a  somewhat  sandy  agricultural 
district,  some  modern  plows  are  in  use  and  they  are  employed  in  a 
few  other  districts.  Dealers  in  Guayaquil  now  keep  them  in  stock 
and  seek  to  interest  their  customers  in  them. 

In  farm  hand  tools  there  is  a  fair  use  of  those  of  American  manu- 
facture, but  this  trade  is  divided  with  England  and  Germany.  High- 
quality  machetes  of  New  England  make  control  the  market  in  the 
coast  region  where  the  sugar  plantations  are.  Hoes  and  adzes  are 
imported  chiefly  from  Germany  and  England  and  shovels  from 
England  and  the  United  States.  Axes  and  hatchets  are  from  the 
United  States.  There  is  a  growing  use  of  wire  fencing  both  barbed 
and  woven,  with  a  tendency  to  favor  the  woven  wire. 

Machine  tools,  while  not  extensively  used,  find  a  good  market,  and 
the  bulk  of  them  are  from  the  United  States,  though  some  of  fine 
grade  are  imported  from  France.  Ecuador  natives  are  noted  for 
their  skill  in  woodwork  and  carpentry.  Lathes,  drills,  and  chisels 
of  good  quality  are  therefore  acceptable  to  them.  The  best  Phila- 
delphia handsaws  also  find  a  market,  though  the  change  of  some  of 
the  local  industries  to  steam  sawmills  has  partly  diverted  the  demand 
to  saws  of  that  class. 

HARDWARE,    SEWING    MACHINES,    AND    MOTORS. 

The  market  for  builders'  hardware  is  a  good  one,  yet  largely  local 
in  its  character.  During  1907  some  300  new  houses  were  built  in 
Guayaquil,  though  many  of  them  were  not  large  ones.  But  all  of 
them  call  for  more  or  less  builders'  hardware  and  much  of  this  is 
supplied  from  the  United  States.  Wire  nails  are  almost  an  American 
■monopoly,  but  in  bolts,  locks,  keys,  etc.,  England  and  Germany  com- 
pete with  the  American  articles.  The  use  of  sheet-iron  roofing  is 
growing  in  the  interior  as  well  as  on  the  coast.  The  United  States 
is  getting  a  little  of  this  trade,  but  can  hardly  expect  a  large  share 
until  the  price  is  lowered  to  a  level  with  the  English  quotations  for 
corrugated  iron.  England  also  has  a  fair  proportion  of  the  trade  in 
iron  bars,  tubes,  and  tinplate.  American  manufacturers  do  not  ap- 
pear able  to  meet  the  English  prices  for  cheap  iron  cots  and  bed- 
steads, for  which  there  is  a  very  good  market.  England  sells  some 
tinware  and  cutlery,  but  Germany  has  the  advantage  in  most  of  the 
articles  of  household  hardware,  though  not  to  the  exclusion  of  the 
United  States. 


28  TRADE    CONDITIONS    IN    ECUADOR. 

The  Guayaquil  dealers  make  attractive  displays  of  the  different 
lines  of  machine  tools,  builders'  hardware,  cutlery,  etc.,  and  American 
manufacturers  find  it  advantageous  to  exhibit  complete  sets  of  their 
manufactures  in  this  manner. 

There  is  some  competition  in  the  sale  of  sewing  machines,  but  it 
is  not  strong  enough  seriously  to  affect  the  purchases  from  the  United 
States.  Typewriters  and  iron  safes  are  of  course  of  American  manu- 
facture. Printing  press  machinery  is  from  the  United  States.  Some 
of  the  Guayaquil  newspapers  have  the  latest  improved  presses  and 
one  of  them  has  introduced  linotypes. 

Good  roads  are  not  extensive  enough  to  provide  a  large  market  for 
motor  vehicles,  but  there  is  a  field  for  them.  The  national  highway 
from  Quito  to  Ambato,  75  miles,  is  kept  in  repair  by  an  automobile 
transportation  company  under  arrangement  with  the  Government, 
and  owners  of  private  motors  have  the  benefit  of  this  arrangement. 
American  motors  were  the  first  ones  introduced  into  Eucador,  but 
the  French  makers  came  into  the  market  and  for  a  while  controlled 
it.  Now  motor  cars  from  the  United  States  are  again  being  imported. 
Motor  boats  have  not  come  into  vogue,  though  they  would  natu- 
rally supplement  the  steam  launches  which  are  imported  from  the 
United  States  for  use  in  the  Guayaquil  Harbor  and  the  rivers  where 
the  native  balsas  or  rafts  ply. 

AMERICAN    TEXTILE    TRADE   LOSS. 

The  trade  in  textiles  is  one  on  which  the  United  States  has  little 
reason  to  congratulate  itself.  At  one  time  in  Ecuador  the  trade  in 
prints  meant  American  prints.  Now  cotton  piece  goods  are  almost 
a  Manchester  monopoly.  The  story  is  told  in  the  customs-house 
returns  of  importations,  which  have  this  item :  "  Cotton  cloths  in 
general,  Great  Britain,  $500,000;  United  States  $25,000."  Such 
headway  as  has  been  made  by  other  countries  in  getting  a  small 
share  of  this  market  has  been  by  Germany  and  Italy.  The  United 
States  still  sends  some  sheetings,  drills,  and  coarse  prints,  but  with 
little  regard  to  the  special-  requirements  of  the  market,  which  are 
the  same  as  in  other  South  American  countries  where  both  the 
torrid  and  the  temperate  climates  obtain  and  the  fondness  of  the 
natives  for  bright -colored  and  gaudy  cloths  governs  their  purchases. 
Some  drills  are  supplied  from  England  that  could  be  furnished  as 
well  by  the  United  States.  Baizes  and  ginghams,  for  which  there  is 
a  good  demand,  are  controlled  by  Manchester.  Italy  and  Germany 
supply  casinettes.  Germany  divides  with  England  the  trade  in 
cotton  blankets  and  England  supplies  the  sewing  cotton  and  the 
satin. 

In  textiles  other  than  cotton  England  and  Germany  are  the  prin- 
cipal competitors  and  their  competition  is  with  each  other.     Eng- 


TRADE    CONDITIONS    IN    ECUADOR.  29 

land  supplies  the  larger  share  of  the  cashmeres  and  linens  and  Ger- 
many the  woolen  shawls  and  ready-made  clothing.  Stiff  hats  are 
from  England,  which  also  furnishes  carpets  and  jute  bagging.  Italy 
has  most  of  the  trade  in  felt  hats.  Silks  and  fine  dry  goods,  for 
which  the  demand  in  Guayaquil  is  considerable,  are  imported  from 
France,  but  silk  and  cotton  mixtures  are  chiefly  from  England,  and 
silk  mantillas  are  imported  from  China.  German  hosiery  has  the 
market  for  this  class  of  goods. 

LEATHER    GOODS    AND   FOODSTUFFS. 

A  variety  of  leather  goods  are  imported,  including  trunks  and 
valises  from  England  and  saddles  from  the  United  States.  The 
petaca  or  small  leather  trunk  which  is  so  essential  for  mountain 
traveling  is  manufactured  locally  to  a  small  extent,  but  the  material 
is  imported.  Germany,  France,  and  the  United  States  supply  the 
tanned  leather,  Germany  having  two-thirds  of  the  trade.  American 
boots  and  shoes  continue  to  hold  the  favor  they  gained  some  years 
ago,  and  this  market  is  worth  $150,000  annually.  Imitations  of  the 
American  styles  have  been  attempted  and  importations  have  been 
received  from  Spain  which  were  sold  at  a  lower  price.  But  the 
quality  was  inferior  and  notwithstanding  that  the  American  style 
was  adopted  the  fit  was  unsatisfactory.  The  hot  and  humid  climate 
deteriorates  leather  goods  rapidly,  and  this  is  one  condition  which 
makes  it  desirable  for  the  American  boot  and  shoe  factories  to  main- 
tain the  quality. 

In  foodstuffs  and  provisions  the  United  States  has  no  strong  com- 
petitor. Wheat  flour  is  occasionally  shipped  by  Chile,  but  not  in 
large  quantities.  The  American  importations  in  some  years  amount 
to  $250,000,  while  a  few  thousand  dollars'  worth  of  corn  meal  is 
taken  and  small  quantities  of  oatmeal  and  breakfast  foods.  Lard  is 
supplied  entirely  from  the  United  States,  the  value  of  the  imports 
in  1905,  which  was  an  average  year,  having  been  $330,000.  Hams, 
bacon,  and  other  packing-house  products  are  imported  in  small 
quantities  and  there  are  some  importations  of  tinned  goods.  The 
imports  of  cotton-seed  oil  from  the  United  States  in  1905  were 
valued  at  $1,500  and  olive  oil  from  Italy,  Spain,  France,  and  other 
European  countries  at  $26,000.  Italy  supplied  butter  and  cheese  to 
the  amount  of  $35,000.  Vegetables  of  various  kinds,  peas,  beans, 
lentils,  onions,  are  imported  from  Chile. 

BEVERAGES,   OILS,   AND   DRUGS. 

The  trade  in  wines,  liquors,  beverages,  and  mineral  waters  is 
rather  curiously  distributed.  Notwithstanding  that  there  are  local 
breweries  the  imports  of  beer  have  increased,  possibly  because  of  the 
lowering  of  the  duty.     This  trade  is  divided  between  Germany  and 


30  TRADE    CONDITIONS    IN    ECUADOR. 

the  United  States,  about  75  per  cent  of  it  being  held  by  Germany. 
In  cognac  and  cheaper  brandies  and  champagnes  France  has  nearly 
all  the  business.  Whiskies,  of  which  the  imporations  are  small,  are 
divided  between  Scotland  and  the  United  States.  Ordinary  wines 
are  from  Spain,  France,  the  United  States,  and  Italy  in  the  order 
named.  Italy  has  the  monopoly  of  vermuths.  Small  quantities  of 
mineral  waters  are  imported  from  Germany,  France,  and  the  United 
States. 

In  petroleum  and  other  oils,  paints,  varnishes,  medicines,  and 
drugs  and  chemicals,  the  United  States  holds  a  leading  place.  Pe- 
troleum is  supplied  to  the  exclusion  of  other  countries.  Drugs  and 
medicines  from  the  United  States  in  1905  were  more  than  double  the 
imports  from  all  other  countries.  Fine  soaps  are  furnished  by  Bel- 
gium, Germany,  and  France  in  the  order  named,  but  some  toilet  soaps 
and  perfumes  of  American  make  have  an  established  market  which 
they  hold  in  spite  of  competition.  The  trade  in  stearin  candles  to 
the  value  of  $150,000  annually  is  in  the  hands  of  Belgium  and 
Germany. 

FURNITURE  OPPORTUNITY. 

In  the  long  list  of  miscellaneous  articles  there  are  some  of  which 
a  larger  quantity  could  be  supplied  by  the  United  States.  One  of 
these  is  furniture.  Germany  now  has  this  market.  Paper  and  its 
manufactures  are  also  staple  imports  from  Germany.  The  United 
States  supplies  printing  paper  but  does  little  in  writing  paper  and 
similar  stationery.  In  earthenware,  crockery,  glassware,  porcelain, 
and  similar  household  articles  the  trade  is  almost  entirely  in  German 
hands.  The  United  States  supplies  more  lampware  than  Germany. 
Cheap  enamel  ironware  is  not  in  extensive  use,  but  the  bulk  of  what 
is  used  comes  from  Germany.  Belgium  and  France  supply  some 
fine  crystal  ware.  Among  other  household  articles  the  United  States 
is  the  source  from  which  brushes  and  sweeping  brooms  are  drawn. 
Sanitary  appliances  are  from  England  and  the  United  States. 
Pianos  and  other  musical  instruments  are  from  Germany.  Common 
muskets  are  imported  from  Spain  and  France,  revolvers  from  Spain 
and  England. 

SHIPPING  SITUATION. 

The  commercial  movement  of  Ecuador  as  to  shipping  might  be 
divided  geographically  into  the  trans-Pacific  trade  with  Australia 
and  China,  which  is  not  of  much  importance ;  the  coast  Pacific  trade 
from  Portland  and  San  Francisco  and  intervening  ports  on  the 
north  and  from  Valparaiso  and  intervening  ports  on  the  south ;  and 
the  trade  via  Panama  and  the  Straits  of  Magellan,  respectively.  The 
bulk  of  the  traffic  is  by  the  latter  two  routes,  though  the  coast 
Pacific  trade  is  considerable,  covering  as  it  does  the  cargoes  to  and 


TRADE    CONDITIONS    IN    ECUADOR. 


31 


from   Oregon   and   California,   Mexico   and   Central   America,   and 
Peru  and  Chile. 

The  nationalities  of  the  vessels  which  have  the  carrying  trade  of 
Ecuador  appear  from  the  following  exhibit  of  the  Guayaquil  ship- 
ping for  two  years : 


1905. 

1908. 

Nationality  and  class. 

Number. 

Tonnage. 

Number. 

Tonnage. 

British  steamers 

106 
2 
53 
36 
3 
2 
10 

172,141 

2,680 
86,820 
78,421 
7,891 
3,858 
6,737 

97 
3 
51 
33 
3 

153,116 

4,787 

85,272 

88,495 

9,590 

Foreign  sailing  vessels 

8 

8,813 

Total                                           -    -    - 

212 

358,548 

195 

350,073 

The  British  vessels  are  chiefly  those  of  the  Pacific  Steam  Naviga- 
tion Company  which  ply  between  Panama  and  Valparaiso,  and  the 
Chilean  steamers  are  of  the  Compahia  Sud  Americana  de  Vapores, 
which  follow  the  same  route.  The  German  ships  are  mostly  of  the 
Kosmos  Line,  whose  itinerary  is  from  Hamburg  to  San  Francisco, 
though  there  are  also  some  direct  voyages  of  German  ships  between 
Hamburg  and  Guayaquil.  The  other  vessels  indicated  come  under 
the  designation  of  the  "  tramps  "  which  compete  with  the  regular 
liners,  and  some  of  the  ships  of  British  and  German  nationality  be- 
long in  the  same  class.  The  Lamport  and  Holt  and  the  Gulf  Line 
and  the  Merchants  Line  from  New  York  dispatch  occasional  vessels 
by  way  of  Magellan  Straits. 

TONNAGE    MOVEMENTS. 

Measured  by  actual  freight  tonnage  the  shipping  of  Guayaquil  in 
1906  amounted  to  70,000  tons,  of  which  5,000  tons  was  local  coastwise 
traffic.  In  the  import  cargoes  there  figured  14,000  tons  of  coal 
brought  by  both  steamers  and  sailing  vessels  and  3,000  tons  of  rail- 
way material.  There  were  6,000  tons  of  merchandise  for  coast  ports 
other  than  Guayaquil.  Exports  were  32,500  tons,  distributed  as 
follows : 

Tons. 

South  American  coast  ports 5,  500 

North  Europe  via  Magellan 8,  500 

North  Europe  via  Panama : 9,  400 

United  States  via  Panama 7,500 

Spain  via  Panama 1,600 

Total 32,  500 

Freight  imported  via  Panama  was  7,500  tons  and  by  way  of 
Magellan  an  equal  quantity.  The  noticeable  feature  of  the  shipping 
is  that  the  traffic  by  way  of  the  Straits  is  decreasing  relatively  and 


82  TRADE    CONDITIONS    IN    ECUADOR. 

that  via  Panama  is  increasing  both  relatively  and  absolutely.  Dur- 
ing 1904  and  the  early  part  of  1905  there  was  an  increase  of  the 
cargoes  brought  through  the  Straits  and  several  of  the  steamship 
lines  added  to  the  number  of  their  vessels  using  that  route,  but  this 
was  checked  by  a  temporary  cause  which  has  a  permanent  effect* 
The  prevalence  of  the  bubonic  plague  at  some  of  the  Atlantic  as  well 
as  the  Pacific  ports  has  proved  a  serious  interference  with  shipping. 
Vessels  coming  through  the  Straits  are  fumigated  at  one  of  the  lower 
Peruvian  ports  and  then  if  they  proceed  to  Guayaquil  another  fumi- 
gation is  required  before  they  will  be  received.  These  fumigations 
are  both  costly  and  vexatious.  While  the  bubonic  plague  has  thus 
had  a  tendency  to  divert  cargoes  from  the  Magellan  route  it  has  not 
been  the  leading  cause.  Guayaquil  is  only  835  miles  from  Panama, 
and  Panama  is  the  natural  route  for  the  bulk  of  the  commerce  of 
Ecuador.  Shipping  facilities  and  freight  rates  on  the  west  coast 
have  been  discussed  very  fully  in  two  official  reports  which  review 
the  whole  situation.0 

INADEQUATE    STEAMSHIP    FACILITIES    FROM    PANAMA. 

The  information  given  in  those  reports  has  a  special  interest  for 
Guayaquil  since  it  is  one  of  the  leading  west  coast  ports.  This  infor- 
mation need  only  be  supplemented  by  again  stating  that  notwith- 
standing the  nearness  of  the  ports  of  the  United  States  no  advantage 
is  had  in  shipping  rates  and  European  shippers  appear  able  to  neu- 
tralize the  advantage  American  shippers  have  in  time  and  distance. 
A  more  important  matter  is  the  inadequacy  of  the  existing  facilities 
to  provide  for  the  increased  traffic  via  Panama  and  the  increased 
trade  generally.  Guayaquil  merchants  complain  Nof  the  losses  to 
which  they  are  subject  by  the  delay  and  uncertaintj^  in  receiving  the 
consignments  and  in  this  they  have  common  ground  with  the  mer- 
chants of  other  west  coast  ports. 

Whatever  the  situation  in  the  past  may  have  been,  I  have  heard  no 
complaints  that  the  Panama  Railway  now  fails  to  get  the  freight 
across  the  Isthmus.  The  trouble  of  the  west  coast  importers  is  in  hav- 
ing it  taken  from  Panama  by  the  steamers.  Some  of  them  send  special 
representatives  to  Panama  to  labor  with  the  steamship  agents.  In 
the  latter  part  of  October  a  steamer  of  the  Chilean  Line  sailed  one 
day  and  one  of  the  British  company  the  following  morning.  Yet 
these  two  steamers  left  5,200  tons  of  freight  and  some  frantic  ship- 
pers on  the  dock.    The  two  companies  are  supposed  to  have  a  work- 

a(l)  Report  to  the  Secretary  of  War  by  Joseph  L.  Bristow,  Senate  Document 
No.  429,  Fifty-ninth  Congress,  first  session.  (2)  Report  on  Trade  Conditions  in 
Central  America  and  on  the  West  Coast  of  South  America,  by  Lincoln  Hutchin- 
son, special  agent  of  the  Department  of  Commerce  and  Labor. 


TRADE    CONDITIONS    IN    ECUADOR.  33 

ing  agreement  as  to  sailing  schedules  and  other  matters  but  appar- 
ently it  is  observed  only  in  maintaining  freight  and  passenger  rates, 
the  latter  being  comparatively  the  highest  in  any  part  of  the  world. 

DELAY    OF    PASSENGERS. 

The  demoralization  in  the  sailing  schedules  often  puts  passengers  to 
a  heavy  expense.  Nominally  the  companies  dispatch  their  steamers 
from  Panama  alternate  weeks,  Thursday  or  Friday  being  the  sailing- 
day,  so  that  passengers  leaving  New  York,  Southampton,  Hamburg 
or  Cherburg  are  supposed  to  be  able  to  continue  their  voyage  with  a 
detention  of  not  more  than  one  to  three  days.  But  during  October 
passengers  from  Europe  and  the  United  States  had  to  wait  intervals 
of  eleven  and  again  of  twelve  days  in  order  to  take  their  passage  for 
Guayaquil  and  the  other  ports.  I  am  informed  that  this  delay  was 
exceptional,  yet  it  is  admitted  that  no  reliance  can  be  placed  on  the 
published  schedules.  Increased  trade  on  the  west  coast  has  increased 
the  number  of  business  men  and  others  traveling,  and  they  are  en- 
titled to  some  consideration  both  in  preventing  loss  of  time  and  in 
incurring  expenses. 

The  question  of  freights,  however,  will  be  the  controlling  one  and. 
in  view  of  the  permanent  addition  to  traffic  by  way  of  Panama  the 
necessity  of  improved  shipping  facilities  through  the  present  lines  en- 
larging their  service  or  by  the  establishment  of  competing  ones  is 
most  important  to  the  commerce  of  Ecuador  and  to  the  entire  west 
coast  of  South  America. 

NATIONAL  FISCAL  SYSTEM. 

The  fiscal  system  of  Ecuador  does  not  bear  heavily  on  imported 
commodities,  many  of  these  being  articles  of  prime  necessity  which 
could  not  stand  too  large  an  impost.  Though  the  various  surtaxes, 
warehouse  and  wharf  charges,  and  miscellaneous  dues  must  be  taken 
into  consideration  in  connection  with  the  customs  schedules  the  total 
does  not  amount  to  figures  that  are  formidable.  With  a  few  excep- 
tions the  tariff  rates  are  specific  and  are  based  on  net  and  gross 
weight  according  to  the  metric  system.  Articles  free  of  duty  include 
a  wide  range  of  construction  material,  steel  rails,  iron  and  steel 
bridge  work,  agricultural  and  other  machinery,  instruments  and 
apparatus,  building  material,  etc.  During  the  periods  of  domestic 
agricultural  scarcity  wheat  and  other  cereals  are  admitted  free 
while  the  duties  are  reduced  on  various  food  products,  but  that  on 
flour  is  high.  Textiles  bear  a  large  part  of  the  duties  that  are 
collected. 

The  proportion  of  the  import  and  export  taxes  is  about  $2  on 
imports  to  $1  on  exports.  In  1900  the  customs  income  from  import 
duties  was  5,649,000  sucres  and  from  export  duties  *2,(>20,000  sucres. 


34  TRADE    CONDITIONS    IN    ECUADOR. 

The  internal-revenue  receipts  are  from  taxes  on  the  consumption 
of  liquors,  land  transfers,  the  stamp  tax,  the  salt  monopoly,  and 
miscellaneous  sources.  The  post-office  system  and  the  Government 
telegraph  and  telephone  lines  produce  no  net  revenue,  both  being 
operated  at  a  loss.  The  national-  revenues  from  all  sources  vary 
from  11,000,000  to  12,000,000  sucres,  or  $5,500,000  to  $6,000,000. 
After  the  current  expenses  of  the  Government  are  met  this  leaves 
little  if  any  surplus  for  guaranteeing  railway  construction  and 
carrying  on  public  improvements  of  a  national  character.  President 
Alfaro's  administration  is  strongly  committed  to  railway  construc- 
tion, but  it  has  to  take  into  account  that  the  Government  of  Ecuador 
is  poor  and  its  wishes  in  this  matter  can  not  always  be  converted 
into  deeds.  HoAvever,  the  recognized  public  debt,  foreign  and  inter- 
nal, is  not  so  large  as  to  preclude  the  probabilities  that  sufficient 
guaranties  may  be  afforded  foreign  capital  to  induce  it  to  undertake 
some  of  the  projects  which  I  have  outlined  in  treating  of  railways. 

THE    PUBLIC    DEBT. 

The  latest  official  information  concerning  the  public  debt  of 
Ecuador  is  contained  in  the  report  of  the  minister  of  hacienda  (sec- 
retary of  the  treasury)  for  1906.  The  obligations  comprising  the 
foreign  debt  consisted  of  the  bonds  issued  for  the  Guayaquil  and 
Quito  Railway:  the  consolidated  debt  or  loans  from  the  banks  of 
Guayaquil  to  the  Government;  credits  to  be  consolidated;  and  the 
loan  from  the  French  Finance  Corporation.  These  debts  are  usually 
described  in  terms  of  condors,  the  condor  being  the  coinage  basis 
of  the  Ecuador  gold  monejr  system,  equal  to  10  sucres,  and  the  exact 
equivalent  of  the  English  pound  sterling.  In  July,  190-1,  gold  bonds 
for  the  railway  had  been  issued  up  to  $9,500,000  and  later  additions 
increased  the  amount  to  about  $12,300,000,  making  allowance  for  the 
redemption  or  amortization.  Some  questions  in  dispute  between 
the  Government  and  the  company  relating  to  the  full  amounts  due, 
the  interest  payments,  etc.,  presumably  will  be  settled  by  the  arbi- 
tration that  is  now  in  progress.  In  1906  an  issue  was  made  of 
$1,000,000  gold  custom-house  bonds  redeemable  at  par  in  payment 
of  50  per  cent  of  the  general  export  duties  and  100  per  cent  of  the 
export  duties  on  vegetable  ivory.  The  proceeds  of  this  loan  were 
for  the  payment  of  the  Guayaquil  and  Quito  Railway  bond  coupons. 
It  was  taken  by  the  local  merchants  and  the  banks. 

The  Guayaquil  Bank  loans  to  the  Government  vary  according  to 
the  hitter's  necessities  and  the  willingness  of  the  banks  to  provide  for 
them.  In  1906  the  sum  was  4,207,000  sucres  or  $2,100,000.  Provision 
is  made  for  paying  the  interest  and  the  amortization  fund  on  these 
loans  by  making  over  the  collection  of  the  export  and  import  duties 


TRADE    CONDITIONS    IN    ECUADOR.  35 

out  of  whicli  the  banks  retain  the  amount  that  is  to  be  applied  to 
interest  and  redemption. 

The  internal  consolidated  debt  amounted  to  $300,000  and  the  float- 
ing debt  consisted  of  obligations  to  Government  employees  and 
similar  items  which  scarcely  can  be  figured  as  part  of  the  national 
debt.  The  loans  from  the  French  Finance  Corporation  totaled 
$440,000  and  were  contracted  in  order  to  meet  the  railway  coupons. 

Guayaquil  has  a  municipal  debt  of  about  $1,000,000.  The  city  is 
rich  and  solvent  and  could  add  largely  to  this  sum  in  carrying  out 
the  project  of  sanitation  without  in  any  manner  impairing  its  credit. 

MAINTENANCE    OF    GOLD    STANDARD. 

One  source  of  strength  to  Ecuador  which  gives  stability  to  its  com- 
merce with  foreign  nations,  particularly  during  periods  of  political 
revolutions  and  other  uncertainties  that  in  some  of  the  South  Ameri- 
can countries  so  seriously  hamper  trade,  is  its  monetary  system.  It 
easily  maintains  the  gold  standard,  there  are  no  violent  fluctuations 
in  exchange,  and  the  value  of  products  bought  in  the  country  or  of 
goods  shipped  to  it  never  is  in  doubt.  The  legislation  providing  the 
gold  standard  went  into  effect  in  1900.  The  real  basis  is  the  English 
pound  sterling,  which  was  declared  by  law  to  be  current  and  legal 
tender.  This  provision  accounts  for  the  importations  of  English 
sovereigns  and  their  employment  as  part  of  the  gold  reserve  of  the 
banks.  In  addition  to  the  gold  coins  the  circulation  is  of  silver  and 
paper  notes.  The  unit  of  circulation  is  the  sucre  and  10  sucres  equal 
a  gold  condor  or  English  sovereign.  The  sucre  is  issued  both  as 
silver  coin  and  as  a  bank  note,  but  the  more  convenient  form  of  the 
note  is  preferred  and  the  silver  circulation  is  more  of  the  minor  coins. 
Bank  notes  are  issued  in  the  denominations  of  1,  2,  and  5  sucres  and 
upward. 

The  Ecuador  law  requires  a  gold  reserve  of  50  per  cent  and  an 
additional  10  per  cent  of  silver  for  banks  of  issue.  There  are  three 
banks  of  issue  whose  notes  are  in  circulation:  Banco  del  Ecuador 
and  Banco  Comeicial  y  Agricola,  of  Guayaquil;  and  the  Bank  of 
Pinchincha,  of  Quito.  The  latter  is  a  new  institution  and  was  started 
chiefly  with  American  and  other  foreign  funds  with  a  capital  of 
$300,000. 

BANKS  OF   ISSUE. 

The  total  outstanding  circulation  of  the  banks  of  issue  as  of  the 
year  1906-7  is  8,308,000  sucres,  divided  as  follows:  Banco  del  Ecua- 
dor, 4,098,000;  Banco  Comercial  y  Agricola,  3,9~)0,000;  and  Bank  of 
Pjchincha,  320,000.  This  does  not  mean  that  the  business  of  the 
country  is  conducted  entirely  on  8,368,000  sucres  or  $4,184,000,  since 
there  is  the  movement  of  species,  principally  sovereigns  imported 


36  TRADE    CONDITIONS    IN    ECUADOR. 

from  England.  In  1906  the  exact  importations  were  £196,000  and 
of  this  amount  £47,000  was  transferred  to  Peru  and  Chile  against 
drafts  on  London.  At  the  beginning  of  1906  the  circulating  medium 
in  the  hands  of  the  public  was  $11,666,824,  divided  into  bank  notes, 
$6,367,000;  gold  notes.  $2,504,869;  and  silver  notes,  $2,794,955. 

Besides  the  three  banks  whose  notes  are  in  circulation  two  mort- 
gage loan  banks — the  Banco  de  Credito  Hipotecario  with  a  capital 
6f  $500,000,  and  the  Banco  Territorial  with  $200,000  capital— are 
organized  on  a  basis  which  gives  them  the  right  to  issue  notes.  The 
'mortgage  banks  issue  warrants  or  "  cedillas  "  for  each  operation  they 
make,  these  warrants  bearing  9  per  cent  interest  and  being  guaranteed 
by  the  mortgage  on  the  property  and  by  the  bank's  capital.  The 
Banco  Comercial  y  Agricola  also  has  a  mortgage  loan  department. 

The  total  deposits  in  all  the  Guayaquil  banks,  including  the  sav- 
ings banks,  at  the  beginning  of  1906  was  $4,115,762. 

DISCOUNTS    AND    EXCHANGE. 

-     The  rate  of  discount  for  the  quarter  of  century  preceding  1905  was 

12  per  cent.  Then  it  was  lowered  temporarily  to  7  per  cent,  with 
subsequent  increase  to  8  per  cent.  Banking  has  been  a  very  profit- 
able means  of  investing  capital,  as  appears  from  the  summary  of  the 
operations  of  the  leading  financial  institutions.  The  Bank  of 
Ecuador  paid  a  dividend  of  15  per  cent  in  1906  and  this  has  been  its 
prevailing  rate  for  a  number  of  years,  except  when  it  paid  16  per 
cent.  The  Banco  Comercial  y  Agricola  paid  12  per  cent;  the  Banco 
de  Credito  Hipotecario  15  per  cent,  and  the  Banco  Territorial  10 
per  cent.     The  average  dividend  on  approximately  $5,000,000  was 

13  per  cent.  All  of  these  institutions  paid  good  dividends  through 
the  previous  years,  although  in  1902,  owing  to  a  commercial  crisis, 
the  Banco  Comercial  called  in  the  whole  of  its  unpaid  capital, 
passed  its  dividend  and  in  the  following  year  paid  only  6  per  cent. 
In  1906  all  the  banks,  in  addition  to  the  dividends  paid,  added  to 
their  reserves.  That  the  financial  community  of  Guayaquil  is  a 
strong  one  is  apparent  from  its  banking  operations. 

The  facilities  for  international  commerce  are  provided  by  means 
of  drafts  on  London  and  Xew  York,  but  the  transactions  are  for  the 
most  part  conducted  through  London.  Ninety-day  commercial 
'  drafts  on  London,  Paris,  or  Hamburg  with  the  bill  of  lading  attached 
are  discounted  at  from  1  to  2J  per  cent.  For  NewT  York  the  time  is 
usually  sixty  days.  These  commercial  drafts  are  drawn  by  the  ex- 
porters against  shipments  of  cocoa,  ivory  nuts,  rubber,  hides,  straw 
hats,  etc.  Bank  drafts  on  New  York  and  London  are  at  three  days' 
.sight  and  |  to  1  per  cent  premium. 


TRADE    CONDITIONS    IN    ECUADOR.  37 

MERCHANTS  AND  TRADE  METHODS. 

The  commerce  of  Ecuador,  the  banking,  exporting  and  importing, 
is  principally  in  the  hands  of  strong  native  firms,  though  foreigners 
are  partners  in  some  of  the  houses,  particularly  those  who  are  inter- 
ested in  shipping.  Most  of  the  exporters  are  also  engaged  in  the 
importation  of  general  merchandise.  Italians  and  Germans  are 
about  evenly  established  in  the  jobbing  trade  and  they  are  the  only 
ones  who  are  at  interior  trading  points  as  well  as  at  Guayaquil. 
The  Italians,  however,  are  more  numerous  in  retail  business.  The 
English  are  well  represented.  The  cocoa  trade  is  the  basis  of  the 
French  firms  and  several  Spanish  houses  are  also  represented. 

A  compact  Chinese  commercial  circle  whose  members  do  their  own 
importing  has  a  profitable  share  in  the  retail  trade  of  Guayaquil  and 
is  showing  a  tendency  to  spread  out  through-  the  country  in  spite  of 
native  opposition.  At  Quito  business  men  have  protested  against  the 
Chinese  opening  stores  and  at  some  of  the  smaller  cities  their  places 
have  been  attacked  by  mobs.  Ecuador  has  a  rigid  Chinese  exclusion 
act  and  the  local  merchants  claim  that  the  Chinese  who  are  trying  to 
open  business  in  the  interior  have  got  into  the  country  surreptitiously 
instead  of  being  members  of  the  Guayaquil  colony  who  were  estab- 
lished in  business  before  the  exclusion  act  was  passed.  Notwith- 
standing the  opposition  which  their  presence  causes  the  Chinese 
mercantile  colony  is  to  be  viewed  as  a  permanent  and  an  influential 
one.  Turkish  subjects,  Syrians,  are  also  making  their  entrance  into 
the  trade  of  the  country  in  spite  of  opposition. 

AMERICAN    REPRESENTATION. 

American  interests  are  fairly  well  established.  The  Guayaquil  and 
Quito  Railway,  which  is  its  own  purchasing  agent,  is  naturally  the 
largest  single  buyer  of  the  manufactured  products  of  the  United 
States.  New  York  leather  interests,  which  are  the  principal  buyers 
of  hides,  in  order  to  facilitate  their  business  have  established  a  trad- 
ing company  which  imports  and  sells  general  merchandise.  Its  head- 
quarters are  in  Guayaquil,  with  branches  in  Quito  and  other  towns 
in  the  interior,  Americans  are  owners  or  partners  in  several  Guaya- 
quil mercantile  houses  and  the  members  of  many  of  the  native  firms 
are  frequent  visitors  to  the  United  States,  so  that  it  can  not  be  said 
there  is  a  lack  of  knowledge  of  American  goods.  On  the  contrary 
the  commercial  communication  is  close. 

As  to  the  means  of  increasing  trade  it  may  be  said  that  while 
circulars  and  catalogues  do  some  good,  samples,  exhibits  of  the  actual 
articles,  demonstration,  and  personal  solicitation  by  commercial 
travelers   who   understand   the   requirements   of   Spanish- American 


38  TRADE    CONDITIONS    IN    ECUADOR. 

people  and  the  business  methods  will  do  much  more  good.  Guayaquil 
by  through  steamer  schedule  is  ten  or  eleven  days  distant  from  New 
York  and  also  from  New  Orleans.  Quito  by  the  railway  is  two  days 
distant  from  Guayaquil,  and  the  trip  there  affords  the  means  of  learn- 
ing the  commercial  wants  of  the  inhabitants  of  the  inter- Andean 
plateaus  and  also  of  those  in  the  Oriente  region  which  stretches  from 
the  slopes  of  the  Eastern  Cordilleras  through  the  fertile  valleys  that 
are  watered  by  the  tributaries  of  the  Amazon.  The  best  time  for 
visiting  the  country  is  the  healthy  season,  comparatively  speaking,  at 
Guayaquil,  which  is  from  June  to  December.  The  coolest  and  most 
pleasant  months  on  the  coast  are  June  and  July. 

NATIONAL   EXPOSITION CHAMBERS   OF   COMMERCE. 

Opportunity  for  the  exhibit  of  actual  goods  and  the  working  dem- 
onstration of  their  utility  is  offered  by  the  national  exposition  which 
opens  at  Quito  in  August,  1909.  This  should  prove  an  especially 
good  chance  for  making  known  American  farm  tools,  such  as  plows 
and  the  simpler  implements.  Information  regarding  the  conditions 
and  the  details  of  the  Ecuador  National  Exposition  can  be  obtained 
later — when  the  plans  are  further  advanced — through  the  Bureau  of 
Manufactures. 

Valuable  means  of  information,  especially  in  regard  to  the  finances, 
export  commerce,  and  the  resources  of  Ecuador  are  the  Chambers  of 
Commerce  of  Guayaquil  and  Quito,  respectively.  The  Guayaquil 
organization  has  been  in  existence  for  several  years.  Its  annual 
reports,  containing  a  full  review  of  the  trade  movements,  are  pub- 
lished in  English.  The  Quito  Chamber  has  recently  been  organized 
and  is  the  mouthpiece  of  the  commerce  of  the  capital.  One  of  its 
objects  is  to  secure  the  establishment  of  a  customs-house  at  Quito. 
This  is  looked  upon  as  a  natural  result  of  the  construction  of  the 
railway.  Other  aims  are  to  stimulate  the  agricultural  development 
of  the  interior  and  to  foster  direct  export  and  import  trade.  Its 
secret ary  may  be  addressed  in  English.  (Lists  of  the  members  of  the 
Guayaquil  and  the  Quito  Chambers  of  Commerce  are  filed  with  the 
Bureau  of  Manufactures.) 

CONCLUSION. 

In  concluding  this  review  of  the  commercial  conditions  in  Ecuador 
with  a  statement  of  the  stable  financial  system  and  the  extent  to 
which  foreign  interests  are  identified  with  the  trade,  I  can  only  ex- 
press the  belief  that  if  the  abundant  natural  resources  are  developed, 
as  they  may  be,  the  foreign  trade  will  be  increased  proportionately. 
American  enterprise,  by  building  the  railway,  has  opened  up  the 
heart  of  the  country  and  added  to  the  area  whose  products  may  be 


TRADE    CONDITIONS    IN    ECUADOR.  39 

marketed  abroad.  The  accumulated  capital  of  the  Guayaquil  busi- 
ness community  can  find  profitable  employment  in  developing  and 
marketing  these  products  and  the  commerce  with  all  countries  will 
be  rendered  more  extensive  and  more  profitable  by  placing  Guayaquil 
on  the  modern  sanitary  basis  of  other  leading  ports. 

.The  geographical  proximity  of  the  United  States,  its  position  as  a 
buyer  of  Ecuador's  products,  and  its  function  in  supplying  the  manu- 
factured and  other  articles  that  are  demanded  by  the  Ecuador  market 
indicate  that  the  present  intimate  commercial  relations  between  the 
two  countries  will  become  closer.  The  Panama  trade  influence  is 
already  felt  and  this  offers  the  opportunity  for  cooperation  in  so  im- 
portant a  matter  as  international  sanitation. 

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